This graph shows
the US
international
monthly imports
and exports over
the years.
Domestic trade:
International trade:
different from
exchange of goods
international trade, is the
and services
exchange of domestic
between nations
goods within the
boundaries of a country.
Types of Trades
Intra Industry trade:
North/South trade: Trading between
Trade between similar products
developed and between countries
developing countries
Expert-oriental industrialization :
A trade method of speeding up the country’s
industrialization process by exporting good for which
the nation has a comparative advantage.
Trade
Advantages
Developed countries could use
techniques like export-oriented
industrialization to speed up their
International trade allows industrialization process by
countries to be provided exporting goods for which the
with items and sources that country has a comparative
they either cannot produce advantage.
or can produce with a very
high opportunity cost.
How does this impact development?
How does this impact
With a higher
development?
productivity rate and
This will allow countries to Graph showing the exports and with more exports
have the products they are imports cost throughout the years. prdocued, the
short of without spending We could see a significant increase. country’s economy
too much money to
would increase.
manufacture the product.
Trade With reference from the
The country exporting and
the country that recieves
the imports are both
Advantages Hecksher-Ohlin Trade
Theory, this model
believes that a country’s
beneficial from trade and export depends on what
this helps develop the a country can prduce
country’s economic most productively and
growth. efficiently.
How does this impact development? How does this impact development?
Both countries would be If a country can produce
beneficial and these certain resources efficiently,
trade connections, this could be used as a product
would increase the of trade, since the proccess of
This graph shows how the manufacturing would not be
markets of each country,
imports, tariffs and exports of a costly and the country would
which will increase its be beneficial for its exports.
country affects GDP
economic growth.
Trade Dependency on foreign goods
A country that exports natural
sources could exhaust these
Disadvantages could create difficulties during
wars and when connections are
forcibly cut off. For example, India
had trouble collecting needles,
sources and its stock is not
tools or medicines through the war
limitless like oil or coal.
as they usually got these from
exports
How does this impact development?
How does this impact development?
If there is any certain wars
If the reliant product that is being
occurring and a country is too
used for trade is out of stock, the
dependent on trade for its
country will not have any other
economic stability and product
source for exports, which will result
This graph shows the income its economic growth would
to a very low economic growth, and
fluctuating US GDP during a war drastically decrease due to this
limits in technology innovations
and after the war. event and impact its development
and government income.
negatively.
Trade
Developed countries are mostly
beneficial in the trade because
they export manufactured goods
Disadvantages Big companies and
industries could avoid
paying taxes while smaller
that have been processed through industries would have to
technological innovations which pay tax while receiving a
will have a higher cost than smaller income from their
developing countries which usually exports.
export raw goods that are worth
less
This graph shows
the increasing
disparity of How does this impact development?
market values in
big and small Bigger companies would develop
companies over sophisticatedly and rapidly because
How does this impact development? of the privelege of no tax, however
the years
If the developed countries smaller companies (that produce less
are the most beneficial profit) would have to pay tax which
makes their economic growth either
from the trade connections,
remain stable or slowly decrease.
its economic growth will The infant-industry theory
increase rapidly, while the states that new industries
How does this impact development?
economic growth of that are developing in
countries find trouble to This makes new industries
developing countries would
start connections against to have a low stable
remain stable instead of economic growth and to
other competitive
increasing. have minimal market value
pressures, sometimes
resulting to unsuccessful and no development.
product exports.
It boosts a country’s
economic growth
The countries getting the
resources will be able to
use them to develop their
own countries
How does all this help
development? This graph shows how the trade
percentage and how the investment
percentage changes over time.
Raises the living
standards in a
country
It creates plenty
of jobs for
people
After World War Two, Latin
American countries and South Asian
The value of world countries imposed heavy
exports of goods and restrictions on manufacturing
services amounted to 0.4 imports. They used the approach of America, Europe and East Asia
Import Substitution Industrialization export high-tech goods, which
trillion dollars - around a where a foreign import is replaced means they recieve a high income
tenth of world output. In with domestic production. This
from their manufactured goods,
2004 world exports resulted for a failure in the economy
while Africa and South Asia tend
swelled to 10.8 trillion to export raw foods like rice, or
dollars, a quarter of textiles.
world output
Examples
Intra industry trade Economies of scale and product
differentiation occurs in the Ford
between Europe and motor company. When the number of
America is when similar cars they produce increase, they were
able to invest in production lines and
product cars are being the number of hours it took to
exported and imported produce each car fell from 12 to 2
within a year.
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