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Unit 7A
International Trading Environment
| Term | Definition |
|---|---|
| Open Economy | economy that imports & exports |
| Exporting | producing goods/service in Ireland and selling them to a foreign country |
| Visible Exports | goods sold to other countries e.g. beef |
| Invisible Exports | services sold to other countries e.g. foreign tourists holidaying in Ireland |
| Importing | buying goods/services from other countries |
| Visible Imports | goods bought from other countries e.g. wine from New Zealand |
| Invisible Imports | services bought from other countries e.g. Irish people going to Garth Brooks Concert in Croke Park. |
| Measuring international trade | Balance of Trade and Balance of Payments |
| Balance of Trade | Visible Exports - Visible Imports |
| Surplus balance of trade | when visible exports are greater than visible imports |
| Deficit balance of trade | when visible exports are less than visible imports |
| Balance of Payments | Total Exports - Total Imports |
| Total exports | Visible + Invisible Exports |
| Total imports | Visible + Invisible Imports |
| Comparative advantage | tradition/ skill in making of a good/service e.g. Ireland has advantage in food production |
| Free Trade | No barriers to movement of goods/services |
| Protectionism | setting barriers to trade such as quotas, tariffs and embargoes |
| Quotas | limit on amount of imports allowed into a country |
| Tariffs | tax imposed on imports |
| Embargo | ban on all imports from a specified country |
| Barriers to trade | tariffs, quotas, embargoes, regulations, subsidies, deregulation, trade restrictions |
| Regulations | rules imposed by a government that make importing difficult. Used to reduce competition for indigenous goods |
| Subsidies | payments by government to firms to reduce cost of production, increase output and allows goods to be sold for cheaper price |
| Trade restrictions | government set limits on amount of foreign currency available for buying foreign goods |
| Deregulation | removal of regulations by government |
| WTO | World Trade Organisation - promotes free trade |
| Trading Bloc | a group of countries that agree to trade freely with each other e.g. NAFTA, APEC |
| NAFTA | North American FreeTrade Agreement |
| APEC | Asia Pacific Economic Co-operation |
| Globalisation | Global firms treat the world as one market & use standardised product and marketing mix |
| Dumping | Other countries selling their over-production on Irish market at below cost price damaging home industry. Outlawed by WTO |
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MsBradyBusiness
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