Trade
Buying and selling things is called trade. Trade is an important way for countries to make money and has been happening across the world for hundreds of years. Today, goods are carried around the world in container ships from port to port and by aeroplane.
To learn more please access the resources below.
Export and Import
People in the UK can sell things they make when people in other countries want them. This might be because they can’t make them themselves or because they are cheaper or better quality. Sending goods like this to other countries is called export.
There are also things, such as bananas or oranges, that are hard to grow in the UK and we have to buy these things from abroad. This is called import.
Sometimes countries need experts from abroad such as engineers, scientists or teachers. These experts can sell their services to people around the world and this is called a service industry. The service industry is the UK's main industry today and we import more goods than we export.
Globalisation
Globalisation has made the world a smaller and more connected place. Multinational corporations, increased global trading and the internet have brought people closer together.
Globalisation is not a new term. People have travelled, traded and shared ideas for thousands of years and there are many global linkages, ie people in one country are connected in many ways with people in other countries.
In recent years the impact of globalisation has become very clear. It can be seen in the following ways:
- communication between people in different parts of the world can be instant
- improved transport and communication links have increased trade, the sharing of ideas and the spread of cultures
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Factors that encourage globalisation include transport and ICT developments.
Transport developments:
- Container ships make transporting bulky goods quick and easy.
- Air transport means people and goods move quickly from one place to another. In recent years the cost of air travel has reduced.
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ICT developments:
- The internet allows people and businesses to communicate instantly.
- Satellite communications allow a global view and communications links even in very remote areas. They enable TV and telephone communications.
- Mobile phones enable people to communicate and to access the internet wherever they are.
- Social networking brings people from all around the world in contact with one another.
Global Trade
Global trade is the result of uneven distribution of materials and resources across the world. No single country has everything it needs and so countries need to trade with each other. Countries that rely on each other to trade goods and services are interdependent.
Sometimes, countries group together to help increase the volume of trade. The European Union is one example of a trading group (or trading bloc).
The global pattern of trade is uneven because:
- most of the valuable trade happens between more economically developed countries (MEDCs)
- MEDCs generally import low-value goods from less economically developed countries (LEDCs)
- there is little trade between LEDCs, partly because they may trade similar products
- newly industrialised countries (NICs) are playing a larger role in world trade
- a lot of trade happens through transnational corporations (TNCs) with a head office in one country, operating in many countries
Transnational Corporations
TNCs or multinational corporations (MNCs) are companies that operate in more than one country. They often have factories in countries that are not as economically developed because labour is cheaper. Offices and headquarters tend to be located in the more developed world. Unilever, McDonalds and Apple are all examples of TNCs.
The Ethics of Global Trade
Current trading arrangements can mean some producers are disadvantaged when trading globally. They may not be able to receive a fair price for their products, or may be working in conditions that compromise their basic living needs. To try to develop a fairer trading system, many organisations have adopted the principles of fair trade. They aim to ensure:
- a fair price is paid for their product
- there are opportunities to improve living standards
- a stronger position for the product in the global market
- opportunities to invest in their local community
The global supply chain is complex, and it may be difficult to ensure that every layer in the production meets ethical and environmental standards.
Fairtrade
Fair trade is a way of buying and selling products that allows the farmers to be paid a fair price for their produce, and have better working conditions. Trade is 'unfair' when farmers receive very low income and have poor conditions while the companies that sell their products make lots of money from them.
The Fairtrade Movement - The Fair World Project
The Fair Trade Story (5 minutes) is an animated short film that provides a succinct and entertaining introduction to the fair trade movement and why it matters. Across the planet, right now, small-scale farmers and their communities are organizing to empower themselves. Consumers are joining them in solidarity to help tip the balance of power away from exploitative corporations and back to the people. Fair trade is a movement of small-scale farmers organizing to change the terms of trade, access the global marketplace, gain a fair price, and improve the lives of their families and communities.
