International Trade (Leaving Cert Business): Revision Notes

International Trade

Why do countries import?

Countries import for the following reasons:

• Lack of Natural Resources: Some countries do not have certain natural resources required for production or consumption. They import these resources to meet their needs. For example, a country without oil reserves may import oil for energy.
• Unsuitable Climate: The climate in some countries may not be suitable for producing certain goods, especially agricultural products. These countries import goods that cannot be produced domestically. For instance, a country with a cold climate might import tropical fruits.
• Lack of Skills: Some countries may not have the technical skills or expertise to produce certain high-tech or specialised products. They import these products to benefit from advanced technology and innovation. For example, a country may import medical equipment that it cannot produce locally.
• Improved consumer choice: Importing goods from other countries provides consumers with a wider variety of products and options. This increases consumer satisfaction and can enhance the quality of life. For instance, importing different brands and models of electronics allows consumers to choose the best fit for their needs.

Why do countries export?

Countries export for reasons such as:

• Survival: Exporting can be crucial for the survival of businesses in countries with small domestic markets. By accessing larger international markets, companies can achieve economies of scale and sustain their operations. For example, a small country may export manufactured goods to ensure its factories remain operational.
• Increased sales and profits: By entering international markets, businesses can significantly increase their sales and profits. Exporting allows companies to reach more customers and sell more products than they could in the domestic market alone. For instance, a company that exports its products worldwide can see substantial revenue growth.
• Diversification: Exporting helps countries and businesses diversify their markets and reduce dependence on a single market. This diversification can provide stability and mitigate risks associated with economic downturns in any one region. For example, a country that exports to multiple markets can better withstand economic fluctuations in one particular market.