1. PowerPoint 5: Balanced trade or trade balance: is the balance right?

2. Balanced trade or trade balance: is the balance right?
Trade balance: the difference in value between a country’s imports and its exports
The figures below show the balance of trade for six countries in What conclusions can you draw from these figures?
Country
Net trade in goods
(billions of US$) in 2008
China
24.62
Germany
21.38
Japan
1.75
Indonesia
0.73
United Kingdom
-14.22
United States
-68.02
Source:

3. Objectives
Know what is meant by ‘balance of trade’
Understand that a country’s role in the global division of labour will influence its balance of trade

4. Task
You are to take part in a trade simulation
There has been an amazing breakthrough in nano-technology. It has been used to make the Sunbrella!
This amazing new product has a clear top with built-in ultra-violet filters to protect you from the sun’s rays on sunny days. But on rainy days the Sunbrella turns opaque and shelters you from rain. Your aim is to own as many Sunbrellas as possible by the end of the simulation

5. The brilliant Sunbrella!

6. Design specification for a Sunbrella
Top = Protractor shape
Handle = 10cm x 1cm

7. A finished Sunbrella
Photo: Catherine Owen

8. Country groups
Thailand, Vietnam, Turkey and Bangladesh each have three or four members
China has five members
Bulgaria has three members
The Philippines, the UK and Greece each have two members

9. Equipment needed
Thailand and Vietnam – scrap paper, 2 pencils, 2 pairs of scissors, 2 rulers, 4 paper clips per group
Turkey and Bangladesh – scrap paper, 2 protractors, 2 pencils, 2 pairs of scissors, 4 paper clips per group
China and Bulgaria – 2 glue sticks, 2 red felt pens, 2 brown felt pens, 20 paper clips per group
Philippines and Greece – 8 paper clips per group
UK – 100 paper clips

10. Thailand and Vietnam
Your job is to make handles for the Sunbrellas
Cut strips of paper 10cm long and 1cm wide
Sell your handles to China or Bulgaria – you will be paid 1 paper clip for each Sunbrella handle you produce
You must use the services provided by the Philippines or Greece to transport your handles
You must not leave your seats

11. Turkey and Bangladesh
Your job is to make tops for the Sunbrellas
Cut protractor shapes out of paper
Sell your tops to China or Bulgaria – you will be paid 2 paper clips for each Sunbrella top you produce
You must use the services provided by the Philippines or Greece to transport your handles
You must not leave your seats

12. Philippines and Greece
Your job is to agree transport costs and transport goods between countries
You are the only people allowed to move around the room
You should negotiate how much you will charge the different countries for each delivery
You must pay 2 paper clips to the UK for each delivery, as they insure your container ships

13. China and Bulgaria
Your job is to apply the nano-technology coating and assemble the Sunbrellas
Colour the handle brown and the top in red. Glue the two parts together
You must pay the UK 1 paper clip for each Sunbrella, as they own the license for the nano- technology
Sell your Sunbrellas to all the other countries and keep some for your domestic market (you don’t have to pay for the ones you keep because you have made them)
You must use the services provided by the Philippines or Greece to transport your Sunbrellas
You must not leave your seats

14. UK
You earn paper clips by insuring the cargo ships used by the Philippines and Greece – they will pay you 2 paper clips for each delivery they make
You also hold the patent license for the nano- technology, so China and Bulgaria must pay you 1 paper clip for each Sunbrella they make
You must not leave your seats.

15. Record your income and outgoings on Activity sheet 4 as you play
Recording your trade
Record your income and outgoings on Activity sheet 4 as you play
Example
This column is cumulative

16. Aim of the simulation
Aim: to own as many Sunbrellas as possible by the end of the simulation
Each country needs to buy as many Sunbrellas as possible by the end of the simulation
The price of a Sunbrella is 10 paper clips
You have __________ minutes to carry out this simulation
Good luck!

17. News Flash!
 The UK has decided to give favourable treatment to Bulgaria, as it is a member of the European Union
 The UK will only buy from China if Bulgaria doesn’t have any Sunbrellas to sell
 The UK will now pay 12 paper clips for each Sunbrella produced in Bulgaria
Photo: istock/David Martyn

18. News Flash!
 The cargo ship owned by the Philippines has sunk, meaning that the current load of Sunbrellas is lost
 The Philippines claims the value of the cargo from the UK via its insurance policy and must refund any countries involved in the shipment
Photo: istock/ Ollo

19. News Flash!
 Thailand and Vietnam hold trade negotiations. They are worried that their forests are being destroyed
 They decide to adopt sustainable forestry practices, planting 1 new tree for each 1 cut down
 This means that the charges will increase from 1 paper clip to 2 paper clips per Sunbrella handle