International Trade short answers

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?

Emerging markets offer rising income levels for potential exports but also increase competition from imports. Signup and view all the answers

What challenges do new EU member states pose to Irish exporters in the agricultural sector?

New EU member states have lower wage rates and costs, making them competitive producers of agricultural products. Signup and view all the answers

How has technology influenced Irish businesses in marketing their products globally?

Technology has sped up communication and facilitated e-commerce, allowing easier access to global markets. Signup and view all the answers

What economic effect could the UK's departure from the European Union have on Irish goods?

The UK's departure may lead to tariffs on Irish exports, increasing costs and reducing competitiveness. Signup and view all the answers

In what ways can remote work technologies benefit Irish firms?

Remote work technologies allow employees to work from anywhere, reducing office costs and improving flexibility. Signup and view all the answers

What could be the effect of rising costs on Irish exports?

Rising costs could make Irish exports more expensive compared to domestic goods, decreasing their demand. Signup and view all the answers

Why is the agri-food sector particularly vulnerable to tariffs from Brexit?

The agri-food sector is highly dependent on exports to the UK, and tariffs would significantly raise costs for UK consumers. Signup and view all the answers

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.

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.