Unit 3 Our Economy LO 3.7 3.10 3. What are the benefits of international trade?
Economic benefits: Larger markets Irish businesses like Traction Bikes have the opportunity to sell to a larger market than the domestic market. This is particularly important for a country as small as Ireland with a market of just 4.6 million people. By exporting their goods, Irish businesses can access a global market of billions of potential consumers. Better prices Customers have access to the best goods at the best possible prices internationally. Tax revenue The government benefits from the increased number of and the increased output from those domestic firms that can export. This creates more employment and has a positive impact on the national budget, as social welfare payments fall and tax revenues grow.
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Social benefits: Consumer choice
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Consumers benefit from a wider variety of goods and services. For example, the importation of cars and mobile phones gives consumers access to goods that are not made in Ireland. Increased standard of living The increase in domestic production as well as greater choice of goods gives citizens a higher standard of living overall. Public services Governments can use increased tax revenue from economic activity to improve public services such as transport, public parks, education and healthcare.
LO 3.7 3.10 4. What are the challenges of international trade?
Economic drawbacks: Stronger competition Irish businesses such as Traction Bikes may face competition from larger and stronger foreign companies which may drive them out of business. Job losses
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If domestic firms struggle to compete with foreign companies, increased unemployment will lead to pressure on the national budget, as tax from income falls and expenditure on social welfare increases.
