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Notes [including case studies] on trade
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Detailed notes [including case studies] on trade for OCR A-Level geography [paper 2]
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Trade [NOTES NOT INCLUDING CASE STUDIES]1.a. International trade involves flows of merchandise, services and capital which vary spatially.
★ Merchandise = all inward and outward movements of goods [NOT SERVICES] through a country. High
value of merchandise exports in the economies of Europe and Asia compared to Africa. Also great
variations WITHIN regions
★ Service = dominated by more advanced countries [ACs & EDCs] & LIDCs tend to be net importers.
Europe is the largest net exporter of commercial services which demonstrates the importance of its
trade with other global regions. However, much of this type of trade in Europe is intra-regional [within
regions - other EU countries]. The contrast in the ability to supply commercial service depend on
factors such as skill & educational levels of workforce, government & private investment e.g in
communications & transport, strength & reliability of financial + legal institutions
★ Commodity =good/material [NOT SERVICE] interchangeable through trade/commerce e.g raw material
★ Capital = accumulated wealth of any kind used in producing more wealth. Include tangibles [real
assets] e.g machinery, buildings, land & intangibles [financial assets]- money, company stocks,
investment finance. The growing interconnectivity of global trade has increased globalisation of capital
flows [most of these flows are between advanced economies]. Another significant feature of global
capital flow is MULTINATIONAL CORPORATIONS [MNCs]. In these large enterprises, goods,
materials & semi-finished products flow between parent companies & their subsidiaries through global
supply chains. Also includes FDIs
★ FDI = Foreign Direct Investment - inward investment by a foreign company [usually large TNC] in a
country = key element of international economic integration. It creates stable & long lasting links
between economies. One of the driving forces of economic globalisation. Significant inward flows of
capital into Africa & Asia which reflects the very high level of interest in investment largely by MNCs
Current & spatial patterns in the direction & components of international trade
★ Inter-regional trade = flow of international trade among world regions such as Europe, Asia, North
America. E.g long established transatlantic trade trade relationship between Europe & North America.
EU & USA are the world’s largest trading partners by value of merchandise, services & capital. In 2014,
the total trade value between the two accounted for over 30% of global trade flows. Reciprocal
investments [protection measures between governments that ensures that investment between 2 or
more states is balanced] between the UK & USA involve very high flows of capital = jobs + growth.
COMPARATIVE ADVANTAGE
US exports to UK = most - Aircraft, space craft [value of US$9 billion]
UK exports to US = most - machines, engines [value of US$9 billion]
★ Intra-regional trade [within the EU] = flow of international trade within one of the major world regions
such as Europe. Most international trade is intra-regional such as the EU [27 member states]. In 2014,
the UK relied on the EU for 75% of its food & non-alcoholic drinks.
Another key words -> economies of scale - MNCs
Factors that influence patterns of international trade
ECONOMIC Physical infrastructure including transport, technology including communications, transport &
production costs, FDIs
POLITICAL Supranational organisations e.g EU, trading blocs, national government policy, trade
agreements, tariffs, free trade, wars/conflict e.g Sierra Leone
SOCIAL Demographic factors which affect labour force & import demand including age structure &
migration, stage in demographic transition, female empowerment, levels of education
ENVIRONMENTAL Distribution of natural resources including oil, climate/soils/water scarcity [affecting food &
agricultural products], natural hazards - more vulnerable if the economy is peripheral economy
that relies on the primary sector/goods e.g Sierra Leone
, 1.b. Current patterns of international trade are related to global patterns of socioeconomic
development
● Close relationship between trade & development. Measures such as value of exports & Human
Development Index [HDI] demonstrate a positive relationship
● Also a close relationship between trade indices such as ‘percentage share in world trade’ and other
indicators of development such as infant or maternal mortality rates.
● E.g: INDIA = HDI increased from 0.483 to 0.586 & its share of merchandise exports has more than
doubled in the same time period
How international trade can promote stability, growth & development within & between countries
through flows of people, money, ideas & technology
❖ International migration of highly skilled workers has an innovative impact [intellectual property]. Also the
‘brain drain’ from LIDCs has an effect on flows of ideas especially when migrants return to their country
of origin & disseminate [spread] acquired knowledge. Therefore, flows of people are important factors
in economic growth & development at all scales.
❖ Monetary [relating to money or currency] flow or foreign exchange is generated through international
trade & this stimulates further investment. In many LIDCs, domestic & foreign investment in
communications, healthcare, transport & infrastructure are important for development
❖ Trade agreements may extend beyond the economics of trade and social & political relationships
develop between countries. E.g can lead to spread of democracy & acceptance of human rights norms
❖ Diffusion of technology related to international trade includes the increasing availability of ICT around
the world. Exporting has been made simpler, quicker & cheaper by use of online currency trading
platforms which allow financial balances to be held in many different currencies. The logistics of
tracking products is easier using cloud based platforms which are capable of monitoring incidents in
supply chains around the world. Improved cybersecurity helps to protect information systems from theft
or disruption & mobile money transfers
STABILITY ➔ Trade encourages states to cooperate, multilateral trade agreements can contribute to
economic & political stability e.g India & China
➔ Some bilateral agreements - assistance in political issues e.g strengthening democratic
processes & human rights which create more stable environment for foreign investors e.g
Sierra Leone
ECONOMIC ❖ Contributes to GDP growth & further investment including FDI & economic multiplier
GROWTH enhanced
❖ Employment opportunities, incomes raised & poverty levels reduced
DEVELOPMENT ➢ Removal of tariffs & other obstacles to LIDC trade help generate foreign exchange which
can be invested to reduce internal inequalities in poverty, health, education, infrastructure
& transport
➢ Corporate responsibility of MNCs can be economic & social benefit
➢ Membership of trade & political unions with common purpose can help socio-economic
development
How international trade causes inequalities, conflicts & injustices for people through uneven flows of
people, money, ideas & technology
● Technology brings many benefits for international trade but access to it is unequal across the world.
E.g huge investment in new technologies for handling large-scale shipping ports in rich countries & the
limited access to these facilities for poor countries reinforces global inequalities in international trade
● Computer & mobile phone ownership & access to signals are still very limited in many EDCs & LIDCs -
without this technology border control & customs for example are more easily subject to breaches of
security & corruption in some developing countries
● Flows of capital e.g FDI in mining operations have negative impacts on indigenous population & natural
environment
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