Importance of International Trade

Why might a company benefit from international trade?

• It can charge import duties on foreign goods and services.

• It can expand its trade in the home market.

• It can export goods and services into a larger market.

• It can increase the country’s Balance of Payments.

What is entrepôt trade?

• arranging trade between two countries

• exporting goods which have previously been imported

• importing duty-free goods only

• selling more cheaply abroad than at home

Why does a country import raw materials from other countries?

• to assist home production

• to obtain customs revenue

• to improve the balance of trade

• to protect home industries

Why are imports important to a country?

• A greater variety of goods are made available.

• More money is brought into the country.

• The Balance of Trade is improved.

• The imports compete with local industries.

Which statement explains why international trade is important?

• Businesses can concentrate on expanding in the home market.

• Many countries produce surpluses of goods to sell.

• There are currency and language differences between countries.

• Trade enables workers to become more efficient and productive.

The diagram shows trade between France and Mauritius.

This diagram suggests that France and Mauritius are

• competitors

• primary producers

• interdependent

• self-sufficient

An export is what the country sells to other countries

• True

• False

Having imports will improve the Balance of Trade because the country is spending less.

• True

• False

International trade has many benefits for a country’s population.

State two benefits of international trade for the people of a country. [2 marks; 500 points for 1 mark]

Comparative advantage happens when countries (a)   in producing what they are best at doing.