Trade Diversification

Economics of International Trade: U2 AOS3

Gavan Sharples
Definition
International trade is the two-way exchange
of goods and services between international
borders. The trade diversification is an
issue that arises when dealing with the
topic of international trade. This issue
involves implementing diversity into the
outputs of an economy, and expanding
international economic relations with other
countries. Trade diversification is an
important element to factor into an
economy, as it can foster international
relations and stimulate national economic
prosperity.
Economic Factors Influencing Trade Diversification
Natural Resources

Natural Geopolitics
Company Globalisation
Company Exchange Rates
Company
Natural Resources
Geopolitics
Globalisation
Exchange Rates
Importance of Trade Diversification
Australia’s exports and imports of goods and services
Current prices (A$ billion)
Importance of Trade Diversification (Local, National, International)

Local National International

- Creates jobs - Can lead to decreased - Supports Global GDP

- Non-economic factors
- Lack of diversity can lead
to vulnerability to natural
disasters
unemployment growth
- Less vulnerability to - Increases Productivity
natural disasters - Affects international
- Less vulnerability to political relationships
change in - Impacts Global Living
economic/consumer trends standards
Perspectives of Economic Actors (5 Sector Flow Model)

Firms have increased Increased Household

Trade Diversification
profits - Wages can Income - Increased amounts
causes exports to
increase of tax
increase

House Governm
Exports Firms Wages
holds ent

Increased exports - Increased Wages -

Firms have increased Households have
profits increased income
Economic Responses relevant to Trade Diversification
Tariffs/Trade Agreements
 Definition

Economic Factors Influencing Trade

Summary Diversification

Importance of Trade Diversification

Perspectives of Economic Actors

Economic Responses