4.1.3 Patterns of trade

• Patterns of trade refer to the structured ways countries exchange goods and services internationally
• Factor endowments include natural resources, labor force, and capital
• Comparative advantage means producing goods at lower opportunity costs.
• Match the factor influencing trade patterns with its example:

  Factor Endowments ↔️ Saudi Arabia exports oil

  Comparative Advantage ↔️ Vietnam produces textiles

  Government Policies ↔️ EU trade agreements

  Consumer Preferences ↔️ Demand for organic foods
• China's dominance in manufacturing is due to its labor-intensive production
• What are the six key factors influencing trade patterns?

  Factor endowments, comparative advantage, government policies, technology, consumer preferences, global events
• Vietnam excels in textile production because of its lower labor costs
• The European Union's trade agreements facilitate seamless trade within the region.
• What technological advancement drives South Korea's semiconductor exports?

  Innovation in productivity
• The rising demand for organic foods has increased their international trade
• The COVID-19 pandemic disrupted supply chains and trade volumes globally.
• Arrange the positive impacts of trade on economic development:

  1️⃣ Increased Productivity

  2️⃣ Job Creation

  3️⃣ Technological Transfer

  4️⃣ Higher Incomes
• What formula represents the relationship between output, labor, and capital in trade specialization?

  Q = f(L, K)</latex>
• International trade fosters the exchange of technology and knowledge
• Trade liberalization can exacerbate income inequality if benefits are concentrated in certain sectors.
• What environmental issue may result from increased production for exports?

  Environmental degradation
• China's manufacturing dominance is due to its labor-intensive production
• Match the factor influencing trade patterns with its example:

  Factor Endowments ↔️ Saudi Arabia exports oil

  Government Policies ↔️ EU trade agreements

  Consumer Preferences ↔️ Demand for organic foods
• What principle states that nations should specialize in producing goods with lower opportunity costs?

  Comparative Advantage
• Global events, such as the COVID-19 pandemic, can disrupt trade by affecting supply chains
• Trade patterns are influenced by a variety of factors, including technology, consumer preferences, and global events.
• What are three primary components of factor endowments that influence trade patterns?

  Natural resources, labor, capital
• Government policies such as tariffs and trade agreements can influence trade flows and competitiveness
• Factors influencing trade patterns in order of their relevance to the material

  1️⃣ Factor Endowments

  2️⃣ Comparative Advantage

  3️⃣ Government Policies

  4️⃣ Technology

  5️⃣ Consumer Preferences

  6️⃣ Global Events
• What does the variable $K$ represent in the formula $Q =$$f(L, K)$?


  Capital
• International trade facilitates the exchange of technology and knowledge between countries.
• Increased production for exports can lead to environmental degradation, such as deforestation in the Amazon
• What is the primary purpose of regional trade agreements (RTAs)?

  Reduce trade barriers
• What is the term for the shift in trade from non-member countries to less efficient member countries due to RTAs?

  Trade Diversion
• Regional trade agreements encourage member countries to specialize in producing goods and services, increasing efficiency.
• The North American Free Trade Agreement (NAFTA) includes the US, Canada, and Mexico
• Match the international organization with its primary role:

  World Trade Organization (WTO) ↔️ Sets rules for global trade

  International Monetary Fund (IMF) ↔️ Provides financial support

  World Bank ↔️ Funds development projects
• What is one positive impact of WTO's free trade agreements on trade patterns?

  Reduces trade barriers
• IMF's austerity measures have been criticized for their negative impact on local economies