Describes exports and imports, specialisation and competitive advantage, foreign direct investment (FDI) and business growth, globalisation, and trade liberalisation
Theme 4 Topic 2
International Trade and Globalisation
Manufacturing has changed in the UK in recent times. Low value manufacturing has been offshored and high
value manufacturing is now what we are good at and concentrate on. Our economy is focusing on high end
globally integrated innovations
Additionally, we are strong in:
Knowledge sector
Service sector
High value manufacturing
Exports and Imports
Exports – goods or services produced in the firm’s home market but then sold to a foreign market
Imports – goods or services bought from a foreign country
Trade Deficit – imports are greater than exports
Trade Surplus – exports are greater than imports
The level of imports and exports is affected by many factors such as tariffs, quotas, government regulation, and
exchange rates
Specialisation and Competitive Advantage
Comparative Advantage – a theory that a country should specialise in products or services that it produces
more efficiently than in other countries
Specialisation
Specialisation – focusing on a limited range of goods/services to enable greater efficiency or develop greater
expertise
Countries become more efficient if they specialise in certain goods and services and then trade them with
other countries
It allows them to develop skills and become efficient, perhaps gaining economies of scale
Competitive Advantage
Competitive Advantage – the advantages a firm has over rival products from overseas
By specialising it enables firms to gain a competitive advantage overseas. By focusing on what it does well a
firm can generate success in overseas markets by replicating the business model
Competitive advantage can take the form of:
Highly trained and skilled staff
Intellectual property and patents
Innovation and R&D
Specialisation in production where a business focuses on a limited scope of products can lower unit costs by
both economies of scale and high capacity utilisation
This enables high prices to be charged or higher profits which can lead to business growth
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller emily1744. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.50. You're not tied to anything after your purchase.
