Transcript 1.4 – Advantages and Disadvantages of International Trade

1.4 –
Advantages
and
Disadvantag
es of
Internation
al Trade
ADVANTAGES
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Disadvantages of Int. Trade
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1.
Meeting Our Needs
• Trade with foreign nations to meet the needs
of Canadian businesses and consumers
• Trade our surplus of inventory of goods and
services for goods and services we want or
need
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2.
Job Creation
• Foreign businesses buy Canadian products
and services, which leads to more jobs for
Canadians
• Jobs lead to salaries and wages to employees
who:
– pay taxes (allows the government to provide
services thus creating more jobs),
– save (capital markets can lend money to others)
and
– spend (on consumer goods and services which
create more jobs)
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• Exports are critical to the Canadian economy
(1/3 of jobs depend on exports)
– More than 40% of everything Canadians produce
is exported
– More than 50% of everything Ontarians produce
is exported
• Every $1 billion in exports means 6000 jobs for
Canadians
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3. Attracting
Investment
• Investment follows trade because foreign
companies will invest in an office, factory or
distribution warehouse in a country where
there is consistently high demand for their
products (simplifies their trade and reduces
costs)
• Their capital investment creates jobs
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4.
New Technology and
Materials
• New technology may allow business to
produce a more competitive product for both
national and international markets
– if a business can create a machine that works
faster, better or cheaper, they can sell the rights
to the patents to foreign companies, collecting an
annual fee, royalty percentage, or one-time
payment
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5.
Diverse Products
and Services
• Foreign trade opens up the world as a
market, delivering a wide range of
– Foods,
– Fashions, and
– New inventions to the Canadian markets
• Competition is no longer in the same city but
anywhere in the world.
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DISADVANTAGES
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Disadvantages of International
Trade
1. Support of Non-Democratic Systems:
• When a Canadian consumer purchases
toys made in China, or vacations in Cuba,
he/she is indirectly supporting nations that
do not provide their citizens with the same
rights and freedoms we, as Canadians,
take for granted.
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2. Cultural Identity Issues:
• Culture is a major export of
the United States.
• American movies, music, TV.
programs, magazines, and
books are very popular world
wide.
• Each of these promotes
American values and
lifestyles.
• Are Canadians “overwhelmed”
by this fascination with
American culture?????
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3. Social Welfare Issues:
• Maintaining safety standards, minimum wages,
worker’s compensation, and health benefits
cost Canadian businesses and taxpayers a lot
of money.
• Countries that do NOT maintain these high
standards can make products less
expensively.
• Supporting trade with these countries by
buying their products perpetuates the problem.
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4. Environmental Issues:
–
–
Many countries that Canada
trades with do NOT treat the
air, the land, and the water
with care and respect.
Pollution controls, recycling
laws, and emission controls
may be non-existent in some
countries around the world.
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5. Political Issues:
• Wars often occur because of the struggle to
control natural resources.
• Thousands of people have been killed for
control of furs, fish, oil, diamonds, or farmland.
• The “blood diamond” trade in Sierra Leone is a
good example of this issues.
• People are killed or maimed to mine diamonds,
and the profits made from the mining
operations goes to fund civil war!!!
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