Economics- Lesson 4: Why Do Countries Trade?

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SPECIALIZATION

TRADE

INTERDEPENDENCE

Big Idea Card

Big Ideas of Lesson 5, Unit 6

Countries trade with each other for the same reasons people trade with each other. They do not have the resources or capability to satisfy their own needs and wants.

Countries have been trading with each other for thousands of years because trade benefits trading partners.

Improvements in communication and transportation have greatly changed global trade.

Over time the speed, volume, geographic range, diversity and complexity of global trade have increased.

Countries specialize in the goods they can produce most efficiently and trade to get other goods they want or need.

Specialization and trade make the countries of the world interdependent.

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Word Cards

27integration

combining parts so that they work together

Example: The integration of communication and transportation systems across the planet has made global trade possible.

(SS060605)

28global trade the exchange of goods or services between individuals, organizations, or governments of different nations

Example: Many nations of the world participate in global or international trade.

(SS060605)

29 currency money; a medium of exchange

Example: Each country has its own type of currency.

(SS060605)

30 exchange rate

an amount of domestic currency compared to an equivalent amount of foreign currency

Example: The exchange rate today was one U.S. dollar to about 6 Chinese Yuan.

(SS060605)

31Euro a single currency shared by many countries that belong to the European Union

Example: The Euro is the official currency in countries such as France, Spain and Germany.

(SS060605)

32 specialization

a method of production where a country focuses on the production of a limited scope of products in order to gain greater degrees of efficiency

Example: Specialization is the basis of global trade.

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1 $ = ??? Euros

33 interdependence

the condition when countries are dependent on other each other for products they cannot produce efficiently for themselves

Example: Interdependence happens as a result of specialization.

(SS060605)

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PowerPoint Notes

1. Why do we usually use money instead of trading goods for goods?

2. What is shown on the slide?

3. Is global trade something new??? ______ yes _____ no

Give evidence for your answer:

4. What are the top five trading partners of the United States (slide 17)?

PREDICTION ACTUAL

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5. What export do you think the cartogram on this slide shows?

6. What do you think are other major U.S. exports?

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PowerPoint Notes, page 2

7. Why do countries export goods?

8. What imported good do you think the cartogram shows?

9. Agree or disagree? Explain your answer.

10. What do you think are other major U.S. imports?

11. Why do countries import goods?

12. Where do you think Levi’s Jeans are made?

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Trade Data for 2013Data are goods only, in billions of dollars

Rank Country Exports Imports Total Trade Percent of Total Trade

1 Canada 300.3 332.1 632.4 16.4%

2 China 122.0 440.4 562.4 14.6%

3 Mexico 226.2 280.5 506.6 13.2%

4 Japan 65.1 138.5 203.7 5.3%

5 Germany 47.4 114.6 162.1 4.2%

6 Korea, South 41.6 62.2 103.8 2.7%

7 United Kingdom 47.4 52.6 100.0 2.6%

8 France 32.0 45.3 77.3 2.0%

9 Brazil 44.1 27.6 71.7 1.9%

10 Saudi Arabia 19.0 51.8 70.8 1.8%

Trade Data http://www.census.gov/foreign-trade/statistics/highlights/top/top1312yr.html

1. What percentage of U.S. trade comes from trade with Canada, China, and Mexico combined?

2. What does this tell you about trade with these three countries?

3. A favorable balance of trade means a country exports more than it imports. With which countries does the U.S have a favorable balance of trade?

4. With what country does the U.S. appear to have the most unfavorable balance of trade?

5. How might the unfavorable balance of trade with this country be a problem?

6. How does the U.S. balance of trade with Canada compare with the balance of trade with China?

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