• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

International trade involves the exchange of goods and services across international boundaries.

Extracts from this document...


International trade involves the exchange of goods and services across international boundaries BENEFITS FROM INTERNATIONAL TRADE As well as the costs and uncertainty involved in international trade there are benefits. Indeed, firms engage in international trade because they believe that the benefits outweigh the costs. Engaging in international trade gives firms access to larger markets enabling them to take greater advantage of economic of scale. Consumer can also gain from international trade. They are able to purchaser goods not made in their own countries, have access to a greater variety of products and can benefit from increased competition in the form of lower-priced and better quality products THE PATERN OF UK TRADE Export and import figures are from 2000 UK trade in service THE BASIS OF TRADE International trade arises because the production of different kinds of goods requires different kinds of resources used in different proportions and the various types of economic resources are unevenly distributed throughout the world. ...read more.


The term 'surplus' and 'deficit' refer to the manner in which the account as been balanced. If outflows exceed inflows (i.e. there is deficit), the account will be balanced by withdrawals from the foreign currency reserves, by borrowing overseas, or by the sale of external assets. These items are counted as inflows (i.e. credit items). If inflow exceed outflows (i.e. there is a surplus), the account will be balanced by items which show how the surplus has been distributed, for example by additions to the foreign currency reserves, the repayment of overseas loans, or the purchases of external assets. These items are treated as outflows (i.e. debit items). CAUSES OF DEFICITS ON THE BALANCE OF PAYMENTS Most attention is usually paid to current account positions and particularly current account deficits. A deficit in current account may arise from high-income levels in the home country. This is because when incomes are high the people will buy more goods and services. ...read more.


Import controls also have the potential to increase domestic inflation. Tariffs directly raise the price of imports on the domestic market and quotas, by limiting the supply of imports, are likely to push up their price. Domestic firms, seeing rival goods from abroad rising in price, may raise their own prices knowing they will be able to remain competitive. OTHER MEASURES TO REDUCE DEFICIT A lack of price competitiveness and high marginal propensity to import are not the only possible causes of a deficit. Firms may be poor at marketing and in order to rectify this government may promote trade fairs and give awards to top exporters and encourage university and other courses in marketing. The quality of goods may be poor and here measures may be undertaken to improve education, training, researches and development. The country may also be producing products that are not in high world demand. In this case government may give financial assistance to improve industry up to standards. Reference: G F Stanlake and S T Grant, (6th edn.), Introductory Economics, Longman, 1995 http://www.statistics.gov.uk/downloads/theme_economy/UK_Trade_In_Services_2000.pdf ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    Assess the importance of international trade to the UK economy

    4 star(s)

    a deficit on its balance of trade, but it has worsened over the last five years, although the deficit as a percentage of GDP has remained fairly constant. One important commodity that has consistently been in surplus the oil balance, this has prevented the goods deficit from worsening even further however this has recently moved into deficit.

  2. Where does the World Trade Organisation fit in the overall scheme of international public ...

    This is, of course, easier said than done, for institutional reform - enforcing property rights and contracts through impartial, effective judicial systems, improving systems of public administration, improving education and health care, rolling out transport and communications infrastructure - must be seen in the context of financial, technical and other constraints, with wide variations across developing countries.

  1. Free essay

    does uk housing market warrant government intervention

    Out of all the options I believe it is this that will have the largest impact and go furthest to rectifying the problem The government has earmarked the Thames Gateway as the site that would lead Britain's housing regeneration. For too many people that only spells disaster.

  2. International Trade - I have been asked to investigate the possibility of a company ...

    China trades with are Hong Kong, Japan and the United States this is what China sees as its main trading partners. They exchange products with one another from this David Lloyd will gather information on what is exported and imported this will be helpful when it comes to them importing machinery and tools to build their gym.

  1. International trade - In this case I choose the country Canada. When doing a ...

    It describes the differences between families with a high, low and middle of income distribution. In 2000 the highest deciles of a family income was above the $ 117,849. The lowest deciles income was lower then $ 18,991. For the whole table of the 10 income deciles, you can find it in the enclosure on page ...

  2. Explain the evolution and characteristics of the debt problems of LDCs. In the light ...

    the primary products tended to be worth less on the global market than manufactured goods with 'added value', but also because prices were more likely to fluctuate. Cavanagh describes this as an "international division of labour" (pp19) that had its roots in colonial times.

  1. Critically evaluate Brazil's International Trade Policy in terms of key trade issues and primary ...

    The main suppliers to Brazil are, in decreasing importance, the EU, the United States, and Argentina (Country Commercial Guide, 2001). The table 2 in appendix shows the Brazil's import and export trade data in 1999 and 2000. * The USA is still the largest single overseas market today, taking 23% of Brazil's exports.

  2. The Benefits of Trade

    and thus; secondly the pursuit of self interest would lead to anarchy and crisis (Marx). A societies values, it's culture, it's social conventions - all these develop in the same way, through voluntary exchange and spontaneous cooperation Economic freedom is an essential requisite for political freedom.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work