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Foreign Trade

Leaving Cert business

TermDefinition
International Trade This involves the buying and selling of goods and services between countries.
Increased World Output The economic output of the world increases because each country dedicates itself to producing those commodities in which it is efficient, e.g. food production in Ireland.
Economies of scale Our firms must export in order to achieve high sales, high profit and to reduce costs
Competition Irish businesses face a lot of competition from foreign firms
Choice and Variety Every economy and its consumers enjoy a wide choice and variety of goods that are made available for consumption through trade but cannot be domestically produced because of climatic conditions, e.g. petrol, types of food, fruit etc.
Economic growth International trade allows, in small countries, like Ireland, with small home markets, export enabled growth in the economy to take place
Free Trade this means that countries can buy and sell products with other countries without any barriers or restrictions placed in their way
Protectionism this means that countries try to stop foreign imports coming into their country or help their own businesses to export their goods
Tariffs These are taxes on imports that make them more expensive than home produced goods.
Quotas These limit the quantity of a particular product which may be imported in a specified period of time
Embargos This is a ban on the imports or exports of a particular product. In 1998 the EU placed an embargo on cattle exports from the UK due to ‘mad cow’ disease
Subsidies Financial assistance can be given to manufacturers from governments to help them keep selling prices low
Competition Competition: To enable firms to compete with low wage countries that can produce products cheaper
Employment: To protect home employment in small and medium sized industries
Dumping To protect the home industry from dumping by foreign competitors. Dumping involves firms selling their surplus stocks in a foreign country at a much lower price than is charged in their own.
Balance of Payments: This refers to a country’s record of all its business dealings with the rest of the world.
Balance of Trade The balance of trade is when the total value of all goods exported (visible goods) is measured against the total value of all the goods imported (visible imports) during the same period of time.
Balance of Payments The balance of payments is the total exports less the total imports of a country
Free Trade Irish firms have direct, unrestricted access to the vast European market.
Lower Costs Irish exporters have to make lots of products to satisfy international demand
Earn Foreign Currency When Irish businesses export to foreign countries, they receive foreign currency
Language Irish people speak fluent English. English is the international language of business
Green Image Ireland has a good image around the world as a clean, green and unspoilt country
Educated Workers Ireland has a well-educated workforce
Diversification International trade gives Irish businesses the opportunity to spread their risk (diversify)
Competition Because of the severe open competition, only the efficient firms will survive.
Training workforce It is necessary to train and retrain the workforce so the firm can avail of the challenges of the changing markets.
Costs Manufacturing and wage costs are much lower in developing countries
Payment difficulties Irish exporters may incur bad debts if they give too much credit to some foreign customers
Distribution costs As Ireland is an island there are extra costs incurred in exporting our goods e.g. air and sea.
Foreign Languages Many foreign customers prefer to deal in their own language.
Exchange Rate Changes If the euro increases in value, the price of Irish products in non-euro countries increases
The European Union With 27 member states, of which Ireland joined in 1973, the EU through its policies and objectives has a huge impact on industry and in Ireland