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Warm-up
Make a list of 5 products, services, or ideas you believe we import.
Make a list of 5 products, services, or ideas that you believe we export
Why are some nations wealthy and others not?
Unit VII – The global Economy
International Trade, International Economic Development
International Trade
Export – Goods sold to another country
Import – Goods bought from another country –
Exports by nation
Advantages of International Trade
Obtaining scarce goods – nations trade for goods that they can otherwise not get on their own EX – diamonds in the US, commercial aircraft
to the rest of the world Comparative advantage – ability of one
country to produce a good more efficiently than another. Japan makes TV’s better than the US does, so
we get our TV’s from them
Advantages of International Trade
Creating jobs – by exporting products, producers expand market and thus can hire more workers
Supporting domestic industries
Tariffs – tax on imports to make them more expensive to buy than domestic goods Some foreign luxury cars are more expensive
than domestic luxury cars Quotas – limit on the amount of foreign goods
imported Reagan put a limit on Japanese cars in the
1980’s to save American autoworkers
Free Trade Zones
Area where goods may be handled and manufactured without the intervention of customs Sea ports, international airports,
Free Trade Agreements
WTO – oversees and organizes trade rules, settles trade disputes, and helps developing countries Criticism
Favors major corporations instead of workers, environment, and poor countries
International Trade as a political Weapon Embargos – nation’s agree to block trade with
a target nation WWII, embargo against Germany, Japan by
USA.
International Trade as a political Weapon Trade Agreements – reduce or eliminate
restrictions between nations to promote free trade
Trade
Balance of trade – difference between value of exports and imports
Trade surplus – exports > imports = making money
Trade deficit – exports < imports = losing money
Negatives of a trade deficit
Lower GDP Higher national debt Higher unemployment Lower savings rates
Globalization
Warmup 5/18
What do you think the term globalization means?
Free Trade Agreements
NAFTA – USA, Mexico, Canada – eliminated barriers to trade between the countries
EU – goods, services, and people can move freely between these countries; uses euro as currency
Free Trade Agreements
IMF – allows countries to donate to money pool and then borrow when they need to meet payments
CAFTA – USA, Costa Rica, El Salvador, Guatemala, Honduras, Nicuragua, Dominican Republic
SEATO – Australia, France, New Zealand, Pakistan, Philippines, Thailand, UK, USA (no longer in effect)
World Bank – provides loans to developing countries
What has the increase in international trade created among nations of the world? Income inequality
Concerns over international trade
Environmental – difficult to monitor multinational (MNC) businesses b/c of varying environmental regulations
Worker exploitation – MNC’s use nations with cheap labor to increase profit margin’s at expense of worker safety and health.
Internationalism
Nations should cooperate to promote common aims
United Nations (UN)
Environmental – Leaders signed treaties to safeguard animal and plant life and limit global pollution
Income inequality – called on businesses to promote economic development in the countries they operate in.
United Nations (UN)
Human Rights – basic freedoms that all people should enjoy Universal Declaration of Human Rights – basic
rights that all people should have (movement, seek asylum, nationality, property, have a family, etc)
International Tribunals – courts that hear and make judgments on violations of human rights
Nations to choose from
Singapore Japan Nigeria Russia Argentina
Closing Questions – Why are some nation’s wealthy? Answer in a few sentences each question on
the same sheet of paper as your warm-up and turn in before class ends. How important are natural resources to a
nation’s wealth? What are the major factors that encourage
long-term economic growth? How does per capita GDP relate to the
quality of life? Why is this important? What do we mean by investment in human
capital?