Questions and Answers
How have tariffs imposed by Donald Trump affected Irish exports to the UK?
Tariffs have increased the cost of Irish goods for UK consumers, leading to a potential fall in Irish sales.
What factors have attracted multinational corporations (MNCs) to establish in Ireland?
Ireland's skilled workforce, language, EU membership, and low corporation tax of 12.5% have attracted MNCs.
What impact might the relocation of MNCs from Ireland have on Irish exports?
If MNCs relocate, Irish exports would likely decrease as a result of reduced production and investment.
How do emerging markets like China and India present opportunities and challenges for Irish exporters?
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What challenges do new EU member states pose to Irish exporters in the agricultural sector?
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How has technology influenced Irish businesses in marketing their products globally?
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What economic effect could the UK's departure from the European Union have on Irish goods?
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In what ways can remote work technologies benefit Irish firms?
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What could be the effect of rising costs on Irish exports?
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Why is the agri-food sector particularly vulnerable to tariffs from Brexit?
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Study Notes
International Trade
- Involves the importing and exporting of goods and services between countries.
Open Economy
- Engages in international trade; vital for countries with small domestic markets, like Ireland.
- Openness measured by the GDP percentage related to imports and exports.
- Ireland exports nearly 80% of its goods due to a small domestic market, contrasting with more closed economies like the USA and UK.
Benefits of Irish International Trade
- Economies of Scale: Large production scales reduce costs for firms like Kerry Group, enabling competitive pricing.
- Access to Larger Markets: Less reliance on the small Irish market allows Irish firms to tap into the 500 million consumer EU market, boosting sales and profits.
- Increased Efficiency: Competition from trade necessitates operational efficiency, lowering consumer prices.
- Ireland’s Green Image: The country's environmentally friendly reputation enhances marketing potential, especially in tourism and food.
- IT Developments:Advanced technology facilitates global communication and marketing, streamlining business operations.
- Language Advantage: Proficiency in English aids Irish businesses in international dealings, enhancing trade capabilities.
- Emerging Markets: New markets like China offer opportunities for Irish exports, particularly in food and beverages.
- Variety: International trade expands access to diverse raw materials, skills, and services for Irish businesses and consumers.
Challenges for Irish International Trade
- High Cost Base: Elevated raw material and labor costs in Ireland hinder competitiveness.
- Distribution Costs: Ireland's geographical position increases distribution costs, affecting export pricing.
- Global Competition: Irish exporters face challenges from global firms offering lower prices and higher quality.
- Language Barriers: Navigating multiple languages in the EU complicates marketing strategies.
- Exchange Rate Fluctuations: Currency volatility impacts pricing and profitability for Irish exporters in non-Euro regions.
- Payment Problems: Different legal frameworks abroad can complicate payment recovery for Irish exporters.
- Customs Duties: Increased trade barriers with non-EU countries can make Irish exports less competitive.
- Cultural Differences: Understanding foreign customs is essential for effective marketing abroad.
Barriers to International Trade
- Governments may impose trade restrictions, known as protectionism, to safeguard domestic industries.
- Protectionist measures aim to reduce imports and improve balance of payments for home countries.
Types of Protection Barriers
- Free Trade Area: Member countries trade with reduced or no tariffs (e.g., NAFTA).
- Customs Union: Members trade tariff-free internally while applying common tariffs externally (e.g., EU).
- Common Market: Trade barriers in goods, services, capital, and labor are eliminated; shared policies may exist (e.g., EU’s Common Fisheries Policy).
Imports
- Defined as purchasing goods and services from abroad, resulting in money leaving Ireland.
Reasons for Importing
- Access to raw materials not available domestically (e.g., oil).
- Products unsuitable for Irish climate conditions (e.g., coffee).
- Economic feasibility for specific goods or services (e.g., cars).
- Increasing variety for consumers (e.g., foreign beverages).
Visible vs. Invisible Imports
- Visible Imports: Physical goods purchased from abroad (e.g., wine from France).
- Invisible Imports: Foreign services purchased (e.g., holidays in Spain).
Import Substitution
- Occurs when domestic producers create and sell previously imported goods, fostering local competition.
World Trade Organization (WTO)
- Encourages global trade by promoting negotiation among member governments and advocating for open trading environments.
Challenges for Irish Exporters
- Globalization: Higher Irish production costs make it difficult to compete against global firms.
- Currency Fluctuations: Strengthening Euro increases Irish export prices, potentially lowering sales.
- International Differences: Understanding local customs, cultures, and languages is essential for successful foreign marketing.
Visible vs. Invisible Exports
- Visible Exports: Physical Irish goods sold abroad (e.g., beef to the UK).
- Invisible Exports: Irish services provided to foreign customers (e.g., online training sessions).
Measuring International Trade
- Balance of Trade (BOT): Difference between visible exports and imports; a surplus indicates exports exceed imports.
- Balance of Invisible Trade (BOIT): Difference between invisible exports and imports; a surplus indicates services sold exceed purchases.
- Balance of Payments (BOP): Overall measure of money entering and leaving a country; a surplus indicates exports outpace imports.
International Economic Effects on Ireland
- Currency Fluctuations: Changes in currency valuation affect export costs and sales.
- MNC Influence: Multinational corporations contribute significantly to Irish exports and can impact the economy if they relocate due to cost changes.
- Protectionism Trends: Tariffs from influential countries may lower demand for Irish products.
- Emerging Markets Growth: Rising economies offer new opportunities for Irish exporters but also increase competition.
- New EU Member States: Eastern European countries may provide lower-cost production options, challenging Irish exporters.
- Technology Developments: Advances in communication and e-commerce enable efficient marketing and international operations.
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Description
Explore the dynamics of international trade with a focus on importing and exporting goods and services. Understand how open economies, such as Ireland, operate within the global market and the significance of GDP in measuring a country's trade activities. This quiz will help reinforce your knowledge about the interdependence of economies worldwide.