International interdependence

Absolute advantage
 An advantage that a country enjoys when dealing in goods and services if it is the
only country that can provide the good or service

Comparative Advantage:
 An advantage in producing one good or service rather than another

**** IF absolute advantage does not exist, comparative advantages can be very important
factors in planning and decision-making****

Factors to consider
 Population
 Climate
 Resources
 Infrastructure
 Supply of energy

Balance of Trade
 The relationship between a country’s total imports and total exports
 Imports- are goods and services flowing into Canada
 Exports – flowing out of Canada
 Trade deficit – a country that pays more for imports than it earns from exports
Trade surplus – a country that earns more from exports than it pays for imports

International Trade
Why would a country decide to trade?
1. Product
-Canada cannot produce all the goods and services it needs
Examples Bananas
-We have an excess of some goods.
Example: Amazing high school teachers (?), Wood, and other natural resources.

2. Proximity
-Counties close to each other can develop relationships. Therefore, trade of goods and
services increase.
Example: Canada and the USA.

3. Preference
-Canadians often demand goods made in other countries that they deem high in quality.
Example: Swiss watches, Belgium chocolate
4.Promotion
- Companies promote their products all around the world. Therefore, they sell
goods/services all around the world.
-Increased sales and profit.
Example: McDonalds

5. Price
-Some products from other countries are made cheaper (lower wages, availability of
material, etc.)
Example: Clothing from South East Asia