3E Economics par. 6.1

• Economie
• Middelbare school
• vwo
• Leerjaar 3

In 2010 The Netherlands had an export of 460 billion and an import of 440 billion. Germany had an export of 600 billion and an import of 620 billion.
Which country has a more open economy?

1. The Netherlands
2. Germany

Import and Export

Value of imports

Import ratio = ------------------ x 100%            

GDP

Value of exports

Export ratio = ------------------ x 100%          

GDP

Causes for import / export

- Availability of goods

- Climate

- Location

- Cost advantage

- Expertise

Availabiliy of goods

Climate

Cost advantage

Expertise

cars from Germany

clothes from Bangladesh

oil from Quatar

rice from Indonesia

Import and Export

International division of labour --------> Specialisation -------->

Goods produced in countries with lowest costs / highest quality ------> Higher prosperity

( The Netherlands focusses on knowledge economy and innovation )

Import and Export

Globalisation increased because of:

- lower transport costs

- better ICT

- multinationals

- cooperation in the EU

European Union

- Free movement of goods and services ( no trade restrictions )

* no import duties between member states

* no export subsidies on export to member states

- Free movement of labour and capital

* employees, money, investments

- Common trade restrictions to non member states

European Union

- The EU forms one big internal market 

- Businesses can profit from economies of scale ( higher productivity )

- European businesses can compete with businesses from Asia and the USA

Protectionism

Article protectionism USA

Protectionism USA

Protectionism

Reasons protectionism:

- protect own industry against foreign competition

- protect own employment

Protectionism

Protectionist measures:

- Import duties

- Import quota's

- Import bans

- Government regulations

- Export subsidies

Production costs in The Netherlands € 0,50. Production costs in China € 0,30. Transport € 0,05
Import duty The Netherlands should minimally be ...(1) and export subsidy The Netherlands should minimally be ...(2)

1. 1 € 0,15 2 € 0,15
2. 1 € 0,15 2 € 0,25
3. 1 € 0,25 2 € 0,15
4. 1 € 0,25 2 € 0,25

Protectionism

Disadvantages protectionism:

- Countermeasures from abroad

- Products more expensive }                 Lower

- Lower quality products }                     Prosperity

Who are bothered the most by protectionist measures?

1. USA
2. Asia
3. Europe
4. Developing countries

Hw.

Par. 6.1 assignments 6 and 8