1. 3.5.3 Economic issues affecting international trade
Where does your mobile phone come from?
HTC
Nokia
Samsung
Apple
HTC Taiwanese
Nokia Finnish
Samsung South Korean
Apple Americam
3.5.3 Economic issues affecting international trade
3.5.3 Economic issues affecting international trade

2. The extremes of income distribution internationally
Income distribution shows how earnings are shared out amongst the population of a country or between countries.
Income per country can be looked at in different ways:
Gross Domestic Product (GDP) is a measure of a country’s income as a whole. It shows the value of all goods and services produced in an economy
GDP or Income per capita (per head) shows the average income of each individual within a country
There are extreme differences in incomes between countries internationally.
3.5.3 Economic issues affecting international trade

3. Rich Countries
Who do you think are the top ten richest countries? You have 5 minutes to come up with your list, in order!
End

4. The extremes of income distribution internationally
The ten richest countries in the world in 2011 were:
United States
China
Japan
Germany
France
United Kingdom
Brazil
Italy
Russia
India
North American and EU states tend to have a fairly equal distribution of income per capita. However, in other countries, the distribution of income can be extreme.
3.5.3 Economic issues affecting international trade

5. The extremes of income distribution internationally
The ten richest countries based on income per capita in the world in 2011 were:
Qatar
Luxembourg
Singapore
Norway
Brunei
United Arab Emirates
United States
Hong Kong
Switzerland
Netherlands
Some of these countries have the advantage of natural resources (Qatar, Norway, Brunei and the UAE have oil reserves).
3.5.3 Economic issues affecting international trade

6. The extremes of income distribution internationally
The two biggest countries in the world in terms of population are China (1.3bn people) and India (1.2bn). On average Chinese and Indian people earn less than $ a year.
However, their economies are seeing rapid growth, much faster than developed countries such as those in the EU and North America.
This has opened up opportunities for British businesses, but has also created threats.
What do you think are the opportunities and threats?
3.5.3 Economic issues affecting international trade

7. Opportunities and threats for British businesses in China and India
Massive populations
Rapidly growing markets
Rising GDP levels
Threats
Can produce products cheaper than UK
This causes unemployment in UK
Takeover of British businesses
3.5.3 Economic issues affecting international trade

8. Import protection and export subsidies
Competition from abroad can lead to calls for protection of British business. Protectionism looks to shield a country’s domestic businesses from the threat of foreign competition.
This can be done in two main ways:
Taxing imports through tariffs, import duties or customs duties
Subsidising exports
Look up the following terms:
tariffs, import duties and customs duties
What does each term mean?
3.5.3 Economic issues affecting international trade

9. Taxing imports and subsidising exports
Imports are payments for goods and services bought from foreign suppliers. Exports are goods and services produced by British suppliers and sold to foreigners.
By taxing imports British people will have to pay more for foreign products. Types of tax include tariffs, import duties and customs duties. Quotas limit the number of products that can be imported into a country. Therefore, less will be sold. If the UK government subsidises exports then these products will be cheaper for foreigners. Demand will rise, benefitting British suppliers.
A subsidy is a grant provided to a business which lowers the cost of producing a good or service. The business can therefore lower the price of the product, leading to an increase in demand
3.5.3 Economic issues affecting international trade

10. Question time
Next plc buy clothes from countries outside of the EU. They will have to pay tariffs on some of these.
Describe one effect tariffs might have on Next.
(2 marks)
2. Average incomes in China and India are much lower than those in the EU. Explain one disadvantage to Next of targeting these markets (3 marks)
1.4.5 Customer satisfaction 10