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Trade and Development

Trade and Development

Assessment

Presentation

Geography

11th Grade

Practice Problem

Hard

Created by

Fareed Abrahams

Used 3+ times

FREE Resource

10 Slides • 0 Questions

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Trade and
development

24 AUGUST 2023

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What is international trade?

Trading happens because of uneven distribution of

raw materials

It plays a major role in a countries economy

No country has an adequate supply of raw

materials

Countries that trade with other countries are

interdependent

Trade happens because the producing country is

able to produce goods and services more cheaply
than the consuming country

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New words

Imports: raw materials, goods and services

bought by a country

Exports: raw materials, goods and services sold

by a country

Trade surplus: Countries that earn more from

their exports than they pay for their imports

Trade deficit: Countries that spend more on

imports then they earn from exports

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Trade commodities

Disadvantages of depending on primary products:

1.

Primary products are usually processed else where to
make more sophisticated products

2.

Manufactured products as added value because they
can be sold for a greater profit

3.

Primary products have little added value

4.

Terms:

5.

Primary products: unprocessed raw materials

6.

Commodity: an item of economic value, intended for
exchange

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Terms of Trade

Why does MEDCs make more form trade than LEDCs?

1.

LEDCs export raw materials to MEDCs

2.

MEDCs export manufactured and processed goods to
LEDCs

3.

Raw materials have much less value than
manufactured goods

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Is Trade fair?

LEDCs has gained the least from the growth in the expansion of

trade

Countries try to protect their own economies by imposing tariffs

and quotas on foreign imports

The World Trade Organisation aims to promote FREE TRADE by

removing these restrictions

TRADE GROUPS like the European Union are setup to promote

free trade between their members and reduce foreign
competition

Countries protect the economy by:

Having trade relationships, free trade, trade barriers, subsidies

and fair trade

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Free Trade

When the movement of goods and services is not restricted

This benefits countries who specialise in mass production and

economies of scale can take place

Economies of scale: in mass production the unit cost of

products falls as the manufactured quantity increases.

Many countries don’t follow free trade although it

encourages co-operation and goodwill between countries.

Free trade does not benefit the wealthier nations because

they exploit the labour and resources of poorer contries,

Tarrifs: taxes that increases the price of import produts

Embargoes: Import restrictions

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Trade Barriers

Quotas: restrictions on the number of foreign products

that can enter a country

Permits: official permission is needed for using airports

and harbours it delays a foreign country attempt to sell
and distribute products

Packaging laws drive up costs on foreign imports

Quality standards: non-tariffs barrier on the imposition of

the product quality

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Subsidies

When a country give support to one of its own industries

to improve its competitive position

E.g. farming subsides offered to rural communities

Most of the benefit goes to the highest income

households because they use more petroleum products

65% of all fuel subsidies goes to richest 40% of households

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Fair Trade

It differs from free trade, in which it guarantees that

farmers and producers in developing countries receive a
fair deal

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Trade and
development

24 AUGUST 2023

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