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Questions and Answers
What is a primary reason for the rise of global trade since 2000?
What is a primary reason for the rise of global trade since 2000?
What outcome is typically associated with specialisation in trade?
What outcome is typically associated with specialisation in trade?
Which of the following best describes 'import'?
Which of the following best describes 'import'?
What is one potential problem of international trade?
What is one potential problem of international trade?
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Which statement accurately represents 'trade in services'?
Which statement accurately represents 'trade in services'?
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What is a potential consequence of high transportation costs?
What is a potential consequence of high transportation costs?
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Which policy aims to protect local producers by limiting foreign competition?
Which policy aims to protect local producers by limiting foreign competition?
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What effect does a tariff have on imported products?
What effect does a tariff have on imported products?
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What is one reason governments might implement trade protection policies?
What is one reason governments might implement trade protection policies?
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How do subsidies affect locally produced products?
How do subsidies affect locally produced products?
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How does a tariff generally affect consumers?
How does a tariff generally affect consumers?
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What is one response a country can take against trade protection policies?
What is one response a country can take against trade protection policies?
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What role does the World Trade Organisation (WTO) play in international trade?
What role does the World Trade Organisation (WTO) play in international trade?
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What major challenge currently affects trading in Hong Kong?
What major challenge currently affects trading in Hong Kong?
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What percentage of Hong Kong’s total exports is represented by re-exports?
What percentage of Hong Kong’s total exports is represented by re-exports?
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Which of the following is NOT a strategy to address challenges in Hong Kong's trade?
Which of the following is NOT a strategy to address challenges in Hong Kong's trade?
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What advantage do subsidies provide to consumers in a domestic market?
What advantage do subsidies provide to consumers in a domestic market?
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What is the primary function of Hong Kong's trade policy?
What is the primary function of Hong Kong's trade policy?
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Study Notes
Trade and Specialization
- Trading is essential for specialization
- Specialization improves productivity as people become skilled in specific goods/services
- Countries specialize in producing goods/services where they have advantages (climate, technology, production costs)
- Trading allows countries to utilize resources efficiently, boosting overall productivity and output
Trade Terminologies
- Domestic trade: within a country/region
- International/external trade: across countries/regions
- Trade in goods: tangible products
- Trade in services: intangible services
- Import: bringing goods into a country
- Export: sending goods out of a country
- Re-export: shipping previously imported goods to another country
Trends in Global Trade
- Global trade has generally increased, especially since 2000
- Factors contributing to the increase: lower transportation costs, lower trade barriers, China's WTO accession
- Gains from trade: more efficient use of resources, boosting economic development, creating jobs, cheaper goods, and improved technologies.
Problems Arising from Trade
- Market monopolies/oligopolies: reduced consumer choices
- Unemployment: certain industries relocate to other countries
Trade Protection Policies
- Policies: Tariffs, quotas, subsidies, foreign exchange controls, embargoes
- Effects: increase the price of imported products, limit the amount of a product, decrease the price of locally produced goods, make importing difficult, complete ban on import/export of certain products.
- Examples: US tariffs on Chinese EVs, EU agricultural subsidies, Russia oil embargo
Impacts of Trade Policies on Consumers
- Tariffs cause higher prices for consumers of imported goods
- Subsidies lead to lower prices of locally produced goods
- Reduced competition can slow quality improvements of goods/services
Responses to Trade Protection Policies
- High-level dialogue with countries imposing trade restrictions
- Expanding domestic markets to reduce reliance on exports
- Seeking membership in organizations like the WTO
- Settling trade disputes and negotiating agreements
- Building the trading capacity of developing countries
Trade in Hong Kong
- Hong Kong has a free trade policy with little to no restrictions on imports/exports
- Hong Kong is a significant global trading entity (10th largest traded goods, 21st largest in commercial services)
- A vast majority of Hong Kong exports are re-exports (transshipment port)
Challenges Facing Trade in Hong Kong
- Development of infrastructure in Mainland reduces Hong Kong's need
- Limited land, higher labor costs make Hong Kong less competitive than neighboring ports
- Competition from other economies and trade restrictions on China
Possible Responses to Challenges
- Signing Free Trade Agreements
- Developing new industries (goods and services)
- Developing new markets
- Improving logistic infrastructure (e.g., airport expansion)
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Description
This quiz explores the concepts of trade and specialization, focusing on how trading enhances productivity and economic efficiency. It discusses different types of trade, key terminologies, and trends in global trade, particularly since the year 2000. Test your knowledge on the fundamentals of international and domestic trade.
