international trade multiple choice

Questions and Answers

What is Ireland's unique selling point in international markets for food products?

Ancient Celtic culture and pollution-free image (correct)

Low cost of production

Diverse range of flavors offered

Advanced technology in production

What is a key challenge Irish exporters face due to globalization?

Access to international markets

Need for efficiency and research development (correct)

Increased demand for Irish goods

Lower production costs compared to global companies

How is the balance of payments calculated?

Total exports - total imports

Balance of trade + balance of invisible trade (correct)

Invisible exports - invisible imports

Visible exports + visible imports

What happens when visible exports exceed visible imports?

There is a balance of trade surplus Signup and view all the answers

What is the impact of currency fluctuations on Irish exports?

They may lead to a decline in sales when the euro strengthens Signup and view all the answers

What constitutes a balance of invisible trade surplus?

Invisible exports higher than invisible imports Signup and view all the answers

What defines visible exports?

Items sold beyond national borders Signup and view all the answers

Why do Irish exporters need to adapt their products for new markets?

To match local tastes and preferences Signup and view all the answers

Which of the following statements about the World Trade Organization (WTO) is correct?

It promotes global trade by negotiating trade agreements. Signup and view all the answers

What would indicate a balance of trade deficit?

More visible imports than visible exports Signup and view all the answers

Study Notes

Distribution Costs and Challenges

High distribution costs for Irish exports due to Ireland's geographical position as an island at the edge of Europe.
Irish firms must manage their costs effectively to maintain competitiveness against global companies.
Global companies pose significant competition with high-quality products at competitive prices, necessitating efficiency improvements and R&D investments for Irish exporters.
Language barriers complicate marketing efforts across the EU, which comprises 20 different languages affecting product names, packaging, and advertising.

Exchange Rate Fluctuations

A stronger Euro increases the price of Irish products in non-Euro countries, potentially decreasing sales and profits.
A weaker Euro raises costs for Irish businesses when importing materials from non-Euro countries.

Payment and Customs Challenges

Difficulty in receiving payments for exports due to varying legal systems across countries, complicating debt recovery.
Customs duties burden goods traded between EU and non-EU countries, raising export prices and reducing competitiveness.

Cultural and Trade Barriers

Awareness of local customs and culture is essential for Irish firms to successfully market products abroad.
Protectionism involves governments instituting trade barriers to defend home industries against foreign competition.

Protectionist Measures

Tariffs: Taxes on imports that elevate their prices, making domestic products more attractive.
Quotas: Limits on quantity of imports allowed over a specific period to favor domestic production.
Embargoes: Bans on specific goods’ import/export due to political or health reasons.
Subsidies: Financial aid provided to domestic companies to help lower their prices and maintain competitiveness.
Administrative regulations: Increased red tape and customs procedures that delay imports, discouraging competition.

Trade Liberalization and Deregulation

Deregulation lowers legal trade barriers, enhancing competition and benefiting consumers with lower prices.
Trading blocs facilitate free trade, eliminating tariffs and reducing barriers among member countries. Types include:
- Free Trade Area: No tariffs or barriers among members (e.g., NAFTA).
- Customs Union: No tariffs among members and shared tariffs on non-members (e.g., EU).
- Common Market: Comprehensive economic integration allowing free trade of goods, services, capital, and labor.

Imports and Exports Overview

Imports allow consumption of goods and services not available domestically, categorized as visible (physical goods) or invisible (services).
Importing reasons include sourcing raw materials, unsuitable climate for production, and consumer variety.
Visible exports entail the sale of physical goods to foreigners, while invisible exports involve services.

Challenges and Opportunities for Exporters

Higher production costs in Ireland challenge exporters against international competitors.
Growing markets in China and Japan present opportunities for Irish exporters, especially in food and drink.
Advances in technology enhance marketing reach and communication, facilitating entry into international markets.
Importance of adapting products to align with international customs and preferences.

Measuring International Trade

Balance of Trade (BOT): Difference between visible exports and imports; a surplus indicates more exports, while a deficit indicates more imports.
Balance of Invisible Trade (BOIT): Measures difference between invisible exports and imports; surplus reflects greater exports.
Balance of Payments (BOP): Total money entering and leaving the country accounting for both visible and invisible trade, indicating overall trade health.

Description

This quiz explores the various challenges faced by Irish exporters, including high distribution costs due to Ireland's geographical location, competition from global companies, and the impact of language differences in selling products. Understanding these factors is essential for Irish firms to enhance their competitiveness in the international market.