5.1

Question 1

Intro/content:

Describe the colonial division of labour.

Answer 1

• Colonial division of labour – developing countries export primary products (agricultural goods and minerals – low value, vulnerable to global demand and climate change) whereas MEDCs (like in Europe and N.America export manufactured goods. 75% of global exports are controlled by developed countries, and their share in financial exports has increased; so they have benefitted the most.

Question 2

Intro/content:

What initiates the spiral of deprivation?

Answer 2

• LEDCs are forced to import manufactured goods from MEDCs, as they have no technology, resources or infrastructure to produce their own [spiral of deprivation].

Question 3

Intro/content

What figures show how developing countries cannot compete with MEDCs in trade.

Answer 3

• 83% of developed countries’ exports are manufactured goods. 56% of developing countries exports are primary products. Sub-Saharan Africa’s exports are declining due to falling prices for agricultural goods (not allowed to put tariffs on products and subsequently cannot compete against MEDCs with infrastructure and tariffs – in global market).

Question 4

Intro/ content, what is the new international division of labour?

Answer 4

• New international division of labour – a global shift in manufacturing production from MEDCs to developing countries. E. Asia’s manufactured exports have significantly increased.

Question 5

Intro/ content, what is the new international division of labour?

Answer 5

• New international division of labour – a global shift in manufacturing production from MEDCs to developing countries. E. Asia’s manufactured exports have significantly increased.

Question 6

Describe the effects of the majour trade blocs.

Answer 6

• Trade blocs (manage and promote trade within geographic regions): EFTA, ASEAN, OPEC, EU, NAFTA, AU (African Union). In the EU 2/3 of exports were exchanged between the 27 member states (most trade is intra-regional). The EU are self-sufficient in most products, meaning it is difficult for LEDCs to import into the EU (especially with price subsidies that protect agriculture). Regional trade allows some protection against larger and aggressive global trading partners.

Question 7

Intro/conclusion

Describe NAFTA.

Answer 7

• NAFTA – 2^nd largest exporter of goods (64% manufactured goods, as well as soybean, corn and wheat). They have 17 of the world’s largest airports (e.g. Atlanta for passenger travel) and the most roads in the world.

Question 8

Describe exports and trade direction in the UK (MEDC).

Answer 8

• $450 billion
• EU and USA
• Invisible trade – finance and banking, tourism
• Rated 7^th
• Fuel – North Sea

Question 9

Describe imports in the UK (MEDC).

Answer 9

• $620 billion (exceeds exports - DEFICIT)
• Rated 5^th
• Manufactured

Question 10

Describe impacts of trade in the UK (MEDC).

Answer 10

Negatives

• Dependent on foreign sources (agriculture)

Positives

• Increased profit from import tax
• Relative cost of manufactured goods has fallen = more affordable
• Growth in financial services – contributes 8% to the world’s services (e.g. London Docklands, incomes are 303% higher in surrounding burrows than the EU average)
• Protectionism – 40% non-EU import tariffs)

Question 11

Describe exports and trade diection in Kenya - an LEDC.

Answer 11

Bananas, tea, minerals, flowers to UK & USA. 30% of GDP - agriculture

Intra-regional trade with Uganda, Tanzania, Zambia etc

• $6 billion
• Invisible trade - tourism

Question 12

Describe imports in Kenya - an LEDC.

Answer 12

• Manufactured
• $18 bn (trade deficit)

Question 13

Describe impacts from trade on Kenya - an LEDC.

Answer 13

Negatives

• Large proportion of primary products are unsellable on arrival (perishable goods).
• Narrow range of commodities
• Lack of stability (high volatility on world markets) à long term planning is difficult
• Money is lost from transport costs.
• Unaffordable value-added taxes. High costs to import American manufactured goods (resulting in a trade deficit). Kenyan pesticide companies are threatened.
• Declining value of exports (low value which does not compare to manufactured goods)
• Production affected by adverse weather conditions, demand
• Costs of production raised due to poor abiotic conditions

Positives

• Fair trade agreement on tea
• Bilateral, legally-binding trade agreements between the EU and Africa on bananas

Question 14

Describe exports and trade direction in China.

Answer 14

• $970 bn
• USA and EU
• Invisible trade - travel and toruism

Question 15

Describe imports in China.

Answer 15

• $790 bn trade surplus
• Manufactured

Question 16

Describe the impacts of trade on China (NIC)

Answer 16

Negatives

Borrowed heavy loans from the World Bank.

• Reliance upon foreign sources – imports a large amount of fuels and mining products (20%)

Positives

• Exponential rise in manufactured goods output (92% of their total exports)
• NIDL – building own factories and are beginning to produce their own manufactured goods.
• Financial services and tourism are beginning to rise
• The world’s top exporter – 14% of global exports
• Joined WTO = massive

Question 17

Describe the trade in Bolivia (LEDC).

Answer 17

Trade surplus

Exports ($4b) – fuel and minerals (natural gas), tin, zinc, coffee, silver, wood, gold, jewellery and soybeans. Low manufacturing.

Imports (43b) – manufactured goods

Brazil = major trade partner. Mercosur

Tariffs from USA are lowered (30% of their exports) – promoting economic alternatives to the drug trade

Question 18

The role of international trade negotiations and agreements;

Hoe do international trade agreements and negotiations benefit the home country?

Answer 18

• Avoid cheap imports that undercut local industries – protectionism. Impose tariffs = more expensive imports (EU 40% tariff to non-EU agricultural imports)
• Avoid over-dependence on foreign sources: import bans – Nigeria banned the importing of goods it could make itself – textiles. Quotas – only so much from a particular source
• Exchange controls – limiting foreign money in a country (there is a limit in Mexico)
• Subsidise exports (e.g. UK on agriculture)
• Barter agreements - trade goods exchanged between countries (Venezuela exchanges oil for Bolivian products)
• Trade blocs – trade agreements between groups of states
• Favoured partner agreements (former EU colonies in the Caribbean had relief of 90% of the tariff on bananas)
• Maintain employment and increase revenue
• Reduce wasteful expenditure on non-essential items
• Help or disadvantage particular areas (e.g. the USA have banned trade with Cuba)

Question 19

What are the negatives if trade negotiations and agreements.

Answer 19

HOWEVER – reduced efficiency and reduced trade.

Question 20

Describe the WTO.

Answer 20

WTO – liberalisation of trade. Reduce barriers that discriminate against LEDCs (remove trade restrictions), services and intellectual property rights within WTO regulations. Tariffication - they have removed agricultural quotas and replaced them with tariffs that provide equivalent protection. Allow for cheap, subsidised food imports.

Question 21

Describe GATT.

Answer 21

GATT – General Agreement on Tariffs and Trade – gradually reduce trade restrictions (e.g. on textiles)

Free trade – allow specialising, reduce costs of goods (higher standard of living), greater choice to consumers, encourage efficiency, cut production costs, cumulative causation and multiplier effect