SECTION 3NATIONAL & GLOBAL

ECONOMY

National & Global Economy

GCSE ECONOMICS: UNIT 11

Understanding International Trade

SECTION 3NATIONAL & GLOBAL

ECONOMYAims of today’s lesson …

• Identify the main types of exports from, and imports to, the UK economy

• Analyse the importance of trade to the UK economy

• Candidates should appreciate the advantages and disadvantages from Global Trade

SECTION 3NATIONAL & GLOBAL

ECONOMYKeywords Search….

• Using Google find keyword definitions of the following;– Imports (M)– Exports (X)– Balance of payments (BOP)– International Trade– Globalisation– BOP Deficit– BOP Surplus

• Complete this using the task sheet called ‘3.1 Understanding international trade’ in the SSA

SECTION 3NATIONAL & GLOBAL

ECONOMYInternational Trade

• Each year the UK trades a high value of goods and services with other countries

• Exports (X) are goods and services that the UK sells to buyers in foreign countries e.g. Jaguar cars

• Imports (M) are the goods and services the UK buys from other countries

Q. What items do we regularly buy which may be imported from foreign countries?

SECTION 3NATIONAL & GLOBAL

ECONOMYWhat are goods & services?

• Goods are things like televisions or cameras, which can be physically handled

• Goods are often referred to as visibles

• Services are things like tourism, financial services or insurance, which cannot be physically handled or seen, often called invisibles

SECTION 3NATIONAL & GLOBAL

ECONOMY

Is International Trade important for the UK?

• By the end of 2010 UK international trade accounted for 3.4% of World Trade

• Forecasters predict that UK trade with the rest of the world will grow substantially over the next 15 years

• It is anticipated that merchandise trade volumes in 2025 will be $1,360.7billion increasing from their levels at the end of 2010 of $933.7billion

• On these figures alone you can see how much international trade is worth to the UK Economy

• A huge number of businesses rely heavily on selling their products and services to international customers, providing a large number of jobs to UK citizens

SECTION 3NATIONAL & GLOBAL

ECONOMYOver to you…

• Open and complete the task below…

3.1 Understanding International Trade

SECTION 3NATIONAL & GLOBAL

ECONOMYBalance of Payments

• Calculate the BOP for the selected goods, services in the table below…

• What is the overall BOP?

SECTION 3NATIONAL & GLOBAL

ECONOMYBalance of Payments

• When we include other goods and services the imbalance (in this case, the deficit) isn’t as severe…

SECTION 3NATIONAL & GLOBAL

ECONOMYPlenary: Trading around the world

• Before you start, think about what you want to accomplish as a trader:– Do you want to build up as much wealth as you can by selling

as much of your commodities as you can? – Do you want to buy the widest range of goods to satisfy

diverse consumer tastes at home? – Or do you want to focus on buying the raw materials for a

particular industry?

• The only limit is your imagination, your negotiating skills, and your bank account!

SECTION 3NATIONAL & GLOBAL

ECONOMY

The importance of trade to the UK Economy

• As we have seen international trade is very important to the UK economy

• Each and every country in the world has a different set of raw materials, climates, cultures, labour skills etc giving them an advantage in producing certain goods and services

• This is known as Comparative Advantage

• Through trade the UK can specialise in produce those goods and services it has a comparative advantage in

• The surplus goods are then sold abroad (i.e. exported), creating jobs for UK citizens

SECTION 3NATIONAL & GLOBAL

ECONOMYOver to you…

• Open and complete the task below…

3.1 Evaluating Trade to the UK Economy

SECTION 3NATIONAL & GLOBAL

ECONOMYThe Social Impact of Trade

• We all enjoy having better choice and paying the lowest possible price, however international trade carries a higher price in terms of its impact on the environment

• We call this impact the carbon footprint

• Many products, such as clothes, toys and cars now carry measurements of their carbon footprint

• Goods bought from other countries will inevitably require more energy to transport them, increasing their carbon footprint

SECTION 3NATIONAL & GLOBAL

ECONOMY

Paired Activity: Advantages & Disadvantages of

International Trade

• International Trade clearly comes with both advantages and disadvantages for UK businesses and the UK Economy as a whole

• Carlton Francis owns a large video game shop in Middlesbrough. He is considering setting up a new website to sell his products abroad.

• Carlton has asked you some key questions:– Why should I bother to sell my games online?– What are the key benefits of selling my products and services

abroad?– Are there any drawbacks to trading internationally?

• Write an email to Carlton that answers all of his questions.

• Use the template in the SSA