Why is the world trading?

Why is there world trade?

• Natural resources

• Price

• Product differentiation

• Political

Natural resources

Ownership of natural resources

Ownership of natural resources

Ownership of ‘natural’ resources

•Airplanes•Cars•Machinery•Pharmaceuticals•Meat•Chemical•movies

Ownership of ‘natural’ resources

The square mile!

Cambridge science park

Cambridge Science

Ownership of ‘natural’ resources

Peat!

World trade

• One of the main reasons for world trade is because different countries have an advantage over others through the ownership of natural resources.

• Other countries have learnt to specialise in certain skills that they can use to trade from.

Price

Price

• Some countries can produce goods relatively cheaper than others.

• Again this is due to specialisation & availability of resources.

Do you think the UK has sweatshops?

• Primark!

• And then there are the ‘real’ sweatshops’… in India

Product Differentiation

Which country would you

prefer to buy a car from?

Product differentiation

• Many countries produce similar goods but the specifications & quality differ!

• Think bottles of wine!

Political Reasons

Political reasons

• Sometimes countries do not trade with each other for political reasons

• Eg US v Cuba

Some more statistics…

Further reading

See next slide…

• http://www.tutor2u.net/economics/revision-notes/a2-macro-pattern-international-trade.html

• Ideas UK position in world trade• Value of world trade• http://www.tutor2u.net/economics/presenta

tions/a2economics/macro/InternationalTrade/default.html - latest version?

Oxfam & world trade

• http://www.oxfam.org/en/campaigns/trade/about

Comparative advantage

• http://www.telegraph.co.uk/finance/economics/6122712/Ricardos-theory-shows-that-win-win-situations-do-exist.html

• Article

UK TradeDeficit widened to £3.5bn in September

• http://www.wto.org/english/news_e/pres09_e/pr554_e.htm

• Look at the bottom of page – great set of country data on their world trade – woyuld make a great activity for students to compare data / countries

• Also has a table of data for 2008

http://www.unctad.org/en/docs/tdr2009_chart17_en.pdf

• http://www.international-economy.com/TIE_Sp09_WorldTrade.pdf

• http://www.guardian.co.uk/commentisfree/2009/nov/23/world-trade-doha-round-deal

• Great reading article by CEO of WTO for students to read for HWK…

• http://www.imf.org/external/datamapper/index.php

• Great student activity looking at ec data