Fundamentals Of Human Geography Chapter 9 International Trade

A. Russia
B. 13.6 billion dollar
C. 72 billion dollar
D. It is unfavourable.

C.

Comprehensive Ports

C.

Europe

C.

Venezuela

C.

ASEAN

A negative balance would mean that the country spends more on buying goods than it can earn by selling its goods. This would ultimately lead to a exhaustion of its financial reserves.

They encourage trade between countries with geographical proximity in trading items, and to curb restriction on the trade of the developing world. Now a days 120 regional trade blocs generate 52% of the world trade.

International trade is a type of specialisation or division of labour.

(i) It benefits the world economy if different countries practise specialisation and division of labour in the production of commodities or provision of services.
(ii) Each kind of specialisation can give rise to trade. Thus international trade is based on the principal of comparative advantages and, in principal, should be mutually beneficial to the trading partners.
(iii) In modern times, trade is the basis of the world’s economic organisation and is related to the foreign policy of nations.

Out ports are deep water ports built away from the actual ports. These serve the parent ports by receiving those ships which are unable to approach them due to their large size.
Example Athens and its out port Piraeus in Greece.

International trade is the exchange of goods and services among countries across national boundaries.

1. U.S.A.  2. U.K.  3. France  4. Germany  5. Japan

The difference between the value of imports and exports of a country is referred to as balance of trade. If the values of export is more than that of imports it is called favourable balance of trade and vice versa.

Trading blocs are the group of countries with formalised system of trading agreements. Most of the world's trade has been taking place within these blocks. Membership of these blocs depend upon the result of the effects of distance, colonial relationship and geopolitical alliances.
For example EU, EFTA, NAFTA, OPEC etc..

 The member countries are:

Algeria, Abu Dhabi, Ecuador, Gabon, Indonesia, Iran, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, UAE and Venezuela.

The act of opening up economies for trading is known as free trade or trade liberalisation.
This is done by bringing down trade barriers like tariffs. Trade liberalisation allows goods and services from everywhere to compete with domestic products and services.

The WTO has however been criticised and opposed by those who are worried about the effects of free trade and economic globalisation.

(i) It is argued that free trade does not make ordinary people’s lives more prosperous.
(ii) It is actually widening the gulf between rich and poor by making rich countries more rich.
(iii) This is because the influential nations in the WTO focus on their own commercial interests.
(iv) Moreover, many developed countries have not fully opened their markets to products from developing countries.
(v) It is also argued that issues of health, worker’s rights, child labour and environment are ignored.

The initial form of trade in primitive societies was barter system where the direct exchange of goods took place.

South Asian Free Trade Agreement (SAFTA).

Viena (Austria).

Bilateral trade and Multilateral trade.

A. Inland ports
Features:

1. Located away from sea coast.

2. Linked to sea through a river or a canal.

B. Out ports
Features:

1. Deep water ports built away from the actual ports.

2. Serve the parent port.

Specialization in the production of certain goods and services by some countries give rise to international trade.
International trade is a type of specialisation or division of labour. It benefits the world economy, if different countries practice specialisation in the production of commodities or provision of services. Each kind of specialisation can give rise to trade. For example, Chinese silk, Taiwan carpets, Indian spices etc. are introduced internationally.

Followings are the aim and  characteristics of the ‘Regional Trade Blocs’ of the world:

The difference in the value between imports and exports is referred to as the balance of trade. If exports exceed imports the country is to have a favourable balance of trade. If imports exceed exports she has an unfavourable balance of trade.

The following significant changes have taken place in the direction of international trade in the past few years :

Ports act as a commercial gateway for the hinterland. The following conditions favour the development of an ideal port:

1. Presence of protective harbor.

2. The deep water for natural harbor is required.

3. A sufficient space is required for docking facilities.

4. The hinterland should be well connected with the port by rail-road routes.

5. Favourable climate so that the port remains open throughout the year.

The basis of international trade are stated below:

(i) Difference in national resources: The world’s national resources are unevenly distributed because of differences in their physical make up i.e. geology, relief soil and climate.
(ii) Population factors: The size, distribution and diversity of people between countries affect the type and volume of goods traded.
(iii) Stage of economic development: At different stages of economic development of countries, the nature of items traded undergo changes. In agriculturally important countries, agro products are exchanged for manufactured goods whereas industrialised nations export machinery and finished products and import food grains and other raw materials.
(iv) Extent of foreign investment: Foreign investment can boost trade in developing countries which lack in capital required for the development of mining, oil drilling, heavy engineering, lumbering and plantation agriculture. By developing such capital intensive industries in developing countries, the industrial nations ensure import of food stuffs, minerals and create markets for their finished products. This entire cycle steps up the volume of trade between nations.
(v) Transport: In olden times, lack of adequate and efficient means of transport restricted trade to local areas. Only high value items, e.g. gems, silk and spices were traded over long distances. With expansions of rail, ocean and air transport, better means of refrigeration and preservation, trade has experienced spatial expansion.

GATT
(i) GATT (General Agreement on Tariff and Trade) was established in the year 1948 in Geneva.
(ii) Its main objective was to pursue free trade in order to encourage growth and development of all member countries.
(iii) Through a series of negotiations, GATT has systematically lowered tariff rates world wide to ensure competition in commodity trade. Thus it has contributed in boosting the world economy in the post-World War period to a great extent.

WTO stands for World Trade Organisation.

(i) It is the successor of GATT from January 1995. It is only international organisation dealing with the global rules of trade between nations.
(ii) It sets the rules for the global trading system and resolves disputes between its member nations.
(iii) WTO also covers trade in services, such as telecommunication and banking, and others issues such as intellectual property rights.

Size of population:
(i) Densely populated countries have large volume of internal trade but little external trade because most of the agricultural and industrial production is consumed in the local markets.
(ii) Standard of living of the population determines the demand for better quality imported products because with low standard of living only a few people can afford to buy costly imported goods.

In January after the harvest season Jon Beal Mela takes place in Jagirod 35 km away from Guwahati. It is the only fair in India where barter system is alive among tribes and communities. A big market is organised during this fair and people from various tribes and communities exchange their products.

In industrialised countries the demand for raw material like grain, meat, wool expanded. These industrialised countries imported primary products and exported finished products.

Undertaking international trade is mutually beneficial to nations if it leads to:
(i) regional specialisation,
(ii) higher level of production,
(iii) better standard of living,
(iv) worldwide availability of goods and services,
(v) equalisation of prices and wages and
(vi) diffusion of knowledge and culture.

Extent of foreign investment:
(i) Foreign investment can boost trade in developing countries which lack in capital required for the development of mining, oil drilling, heavy engineering, lumbering and plantation agriculture.
(ii) By developing such capital intensive industries in developing countries, the industrial nations ensure import of food stuffs, minerals and create markets for their finished products.

(iii) This entire cycle steps up the volume of trade between nations.

(i) International trade can prove to be detrimental to nations of it leads to dependence on other countries, uneven levels of development, exploitation, and commercial rivalry leading to wars.
(ii) Global trade affects many aspects of life; it can impact everything from the environment to health and well-being of the people around the world.
(iii) As countries compete to trade more, production and the use of natural resources spiral up, resources get used up faster than they can be replenished. As a result, marine life is also depleting fast, forests are being cut down and river basins sold off to private drinking water companies.
(iv) Multinational corporations trading in oil, gas mining, pharmaceuticals and agri-business keep expanding their operations at all costs creating more pollution – their mode of work does not follow the norms of sustainable development.
(v) If organisations are geared only towards profit making, and environmental and health concerns are not addressed, then it could lead to serious implications in the future.

1. European Union (E.U.): Originally it was founded in 1957 by six members - Italy, France, West Germany, Belgium, the Netherlands and Luxemburg. It was called The European Economic Community (EEC). Later it expanded to include most of western Europe. The EEC changed into European Union (E.U.) in 1995. A common currency, the euro was launched in 1999. With 400 million people, the EU is the largest single market in the world.

D.

GATT

B.

Exports excess imports

C.

Trade liberalisation

C.

Direct exchange of goods and services.

D.

1995

C.

Transport and machinery

A.

favourable

D.

Finland

A.

Aden

A.

China and Rome

D.

Brussels

B.

1708

China and South West Asia.

exchange of commodities between two countries.

the value of exports are more than imports

General Agreement on Tariffs and Trade

Organisation of Petroleum Exporting Countries.

South Asian Association of Regional Co-operation.

gateways of international trade

Kolkata

EFTA

13

Iran

(i) Five greatest trading nations are: Japan, U.S.A., Germany, France and UK.

(ii) Member countries of ASEAN

(Association of South-East Asian Nations):

1. Indonesia, 
2. Malaysia,

3. Thailand,
4. Philippines,

5. Singapore and
6. India.

(iii) Member countries of OPEC (Organisation of Petroleum Exporting Countries): 1. Algeria, 2. Ecuador, 3. Gabon, 4. Indonesia, 5. Iran, 6. Kuwait, 7. Libya, 8. Nigeria, 9. Qatar, 10. Saudi Arabia, 11. United Arab Emirates, 12. Venezuela, 13. Iraq.
(iv) Member countries of EFTA are Norway, Sweden, Switzerland, Portugal, Austria, Iceland, Finland.

Port Said and Port Suez.

UAE

Trades:

 (a)  Bilateral trade: Bilateral trade is done by two countries with each other. They enter into agreement to trade specified commodities amongst them. For example, country A may agree to trade some raw material with agreement to purchase some other specified item to country B or vice versa.

 (b)  Multi-lateral trade: As the term suggests multi-lateral trade is conducted with many trading countries. The same country can trade with a number of other countries. The country may also grant the status of the “Most Favoured Nation” (MFN)  on some of the trading partners. 

Ports:

 (i) The chief gateways of the world of international trade are ports. Cargoes and travellers pass from one part of the world to another through these ports.

 (ii) The ports provide facilities of docking, loading, unloading and the storage facilities for cargo.

 (iii) The importance of a port is judged by the size of cargo and the number of ships handled. The quantity of cargo handled by a port is an indicator of the level of development of its hinterland.

Examples:

(i) International trade can prove to be detrimental to nations of it leads to dependence on other countries, uneven levels of development, exploitation, and commercial rivalry leading to wars.

(ii) Global trade affects many aspects of life; it can impact everything from the environment to health and well-being of the people around the world.

(iii) As countries compete to trade more, production and the use of natural resources spiral up, resources get used up faster than they can be replenished.

(iv) As a result, marine life is also depleting fast, forests are being cut down and river basins sold off to private drinking water companies.

(v) Multinational corporations trading in oil, gas mining, pharmaceuticals and agri-business keep expanding their operations at all costs creating more pollution – their mode of work does not follow the norms of sustainable development.

Bases of International trade:

(i) Difference in national resources: The world’s national resources are unevenly distributed because of differences in their physical make up i.e. geology, relief soil and climate.

(ii) Population factors: The size, distribution and diversity of people between countries affect the type and volume of goods traded.

(iii) Stage of economic development: At different stages of economic development of countries, the nature of items traded undergo changes.

(iv) Extent of foreign investment: Foreign investment can boost trade in developing countries which lack in capital required for the development of mining, oil drilling, heavy engineering, and lumbering and plantation agriculture.

(v) Transport: With expansions of rail, ocean and air transport, better means of refrigeration and preservation, trade has experienced spatial expansion.

(14.1) 1965-1975
(14.2) 10393000-95000 = 102,98,000 millions of US $

(14.3) Economic development

It sets the rules for global trading system.

Port: Is the entire area on the sea coast with dock facility for loading and unloading of cargo. It includes administrative blocks, ware houses, custom office and transport facilities etc.

Harbour: is partially enclosed part of the sea coast providing shelter to the ships. It can be natural or manmade e.g. creek, estuary, or sea inlet.

Port as gateways of international Trade:

(i) Ports handle cargo and passenger traffic

(ii) Ports are handling large volumes of domestic as well as overseas trade.

(iii) Port provides a corridor between its hinterland and the rest of the world for international trade.

Map of the World:
(A) Appalachian Region
(B) St. Petersburg
(C) Brasilia
(D) Cape Town
(E) Jakarta

International trade has three very important aspects.

(i) Volume of Trade- The actual tonnage of goods traded makes up the volume. However, services traded cannot be measured in tonnage. Therefore, the total value of goods and services traded is considered to be the volume of trade.

(ii) Composition of Trade- The nature of goods and services imported and exported by countries have undergone changes during the last century. Trade of primary products was dominant in the beginning of the last century.

(iii) Direction of Trade- Historically, the developing countries of the present used to export valuable goods and artefacts, etc., which were exported to European countries. During the nineteenth century there was a reversal in the direction of trade.

New Industrial Policy has three main dimensions: liberalisation, privatisation and globalisation.

(i) The industrial licensing system has been abolished for all except six industries related to security, strategic or environmental concerns. At the same time, the number of industries reserved for public sector since 1956 have been reduced from 17 to 4.

(ii) In the new industrial policy, Foreign Direct Investment (FDI) has been seen as a supplement to the domestic investment for achieving a higher level of economic development. FDI benefits the domestic industry as well as the consumers by providing technological upgradation, access to global managerial skills and practices, optimum use of natural and human resources, etc.

(iii) The industrial policy has been liberalised to attract private investor both domestic and multi-nationals. New sectors like, mining, telecommunications, highway construction and management have been thrown open to private companies.

(iv) Globalisation means integrating the economy of the country with the world economy. Under this process, goods and services along with capital, labour and resources can move freely from one nation to another. The thrust of globalisation has been to increase the domestic and external competition through extensive application of market mechanism and facilitating dynamic relationship with the foreign investors and suppliers of technology.

(v) A breakup of foreign collaboration approval reveals that the major share went to core, priority sectors while infrastructural sector was untouched. Further, gap between developed and developing states has become wider. Major share of both domestic investment as well as foreign direct investment went to already developed states.

( 8.1) Suez canal

(8. 2) Characteristics -

i. It connects Mediterranean sea with Red sea.

ii. It gives Europe a new gateway to the Indian Ocean.

iii. It reduces distance between Liverpool and Colombo.

iv. It is sea level canal without locks. v. As the tolls are heavy, some find it cheaper to go by the longer Cape Route whenever the consequent delay is not important.

Characteristics of chain stores in the world are :-

 i. Chain stores are able to purchase merchandise most economically to their specification.

ii. They often direct the manufacturers.

iii. They employ highly skilled specialists.

iv. They have the ability to experiment in one store and apply the results to many.

International trade is the result of specialisation in production. It benefits the world economy if International Trade 83 different countries practise specialisation and division of labour in the production of commodities or provision of services. Each kind of specialisation can give rise to trade. Thus, international trade is based on the principle of comparative advantage, complimentarity and transferability of goods and services and in principle, should be mutually beneficial to the trading partners. In modern times, trade is the basis of the world’s economic organisation and is related to the foreign policy of nations. With welldeveloped transportation and communication systems, no country is willing to forego the benefits derived from participation in international trade.

Positive aspects of trade liberalisation:

a. It has increased competition in the market and has reduced the cost of products.

b. Accessibility and affordability of goods improved.

c. New markets have opened for producers.

The Rhine Waterway plays a significant role in the development and prosperity of Western Europe in the following ways:

a. The Rhine Waterway passes through Germany and the Netherlands. The Ruhr joins the Rhine from the east.

b. It connects Rotterdam in the Netherlands to Basel in Switzerland. It is navigable for large ocean vessels up to Cologne.

c. It connects various industrial regions of Switzerland, Germany, France, Belgium and the Netherlands with the North Atlantic Sea Route.

d. Raw materials for industries located in this region which are imported from other parts of the world are carried through this waterway.

e. Finished goods and capital goods from high-tech modern industries of Western Europe are exported all over the globe through this waterway.

f. It provides a cheap and safe way of transport.