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Economic Interdependence Francisci WG.9(a)
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Remember: Interdependence: When nations must trade for resources they do not have. Global trade market exists to import and export goods, services, and capital resources. Export: Shipping of goods or services out of a country. Import: Bringing in of goods and services into a country.
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Factors that Influence Economic Activity: Access to human, natural and capital resources 1. Skilled Workers – More in developed countries 2. Natural Resources – If a country gathers its resources and exports them, that country is probably developing.
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Factors that Influence Economic Activity: 3. Technology – Developed countries have better access to new technology. 4. Transportation – Developed countries well constructed and strong infrastructure. 5. Investment Capital – Developed countries have more capital resources.
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Factors that Influence Economic Activity: Location and ability to exchange goods 1. Landlocked Countries: Country that is completely surrounded by land with no access to a sea or ocean (Water is the cheapest way to transport goods). Ex. Paraguay, Democratic Republic of the Congo. 2. Coastal and Island Countries: Have greater access to seas and/or oceans to transport goods cheaply. Ex. Japan, U.S. and UK.
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Factors that Influence Economic Activity: 3. Proximity to Shipping Lanes: Countries located near major trade routes have an economic advantage. Ex. Singapore, Egypt (Suez Canal), Panama (Panama Canal). 4. Communication Networks: Developed countries have a stronger infrastructure which makes it easier to communicate within the country and with other regions as well.
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What is Comparative Advantage? Comparative Advantage: The ability of countries to produce goods and services at lower relative costs than other countries, resulting in exports of goods and services.
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Why does Comparative Advantage exist? Comparative advantage exists because of the unequal distribution of natural resources across Earth’s surface (this is very good for developing countries).
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Effects of Unequal Distribution of Natural Resources: Countries specialize in goods and services they can market for a profit (Countries usually produce goods and services that use their own available natural resources). Countries exchange goods & services A country will export (exit the country) what it can market. A country will import (into the country) what it needs. Trade: The exchange of goods and services between countries.
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Effects of Comparative Advantage on International Trade: Countries produce goods and services they can market for a profit. Workers develop specific skills (specialization of labor). Nations develop specific industries (Ex. steel industry, aircraft production, automobile industry, clothing industry).
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Russia’s uses of Natural Resources: Numerous resources (minerals, metals, oil, and natural gas). Natural resources are located in areas that are not economically profitable to develop.
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United States use of Natural Resources: Diversified economy Abundant natural resources (forests, freshwater, oil and mineral deposits, along with fertile soil, coal and natural gas). Specialized industries
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Switzerland’s use of Natural Resources: Limited natural resources (iron, manganese, some coal) Produce services on global scale Ex. Known for banking industry on global market
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Japan’s use of Natural Resources: Highly industrialized (developed) Major manufacturing region (cars like Honda, Toyota and Mitsubishi, electronics like Sony, Panasonic, etc). Very limited natural resources Most valuable resource is skilled labor (human resource).
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Cote d’Ivoire (kout divwar) use of Natural Resources: Cote d’ivoire: a republic in western Africa on the Gulf of Guinea; one of the most prosperous and politically stable countries in Africa. Limited natural resources Cash crops exchanged for manufactured goods (commercial farming)
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