Chapter 8: International Trade

Short Questions (3 marks)

Q1. “Every January after the harvest season „Jonbeel Mela‟ takes place in Jagiroad, 35 kilometers away from Guwahati and it is possibly the only fair in India, where „barter system‟ is still alive. A big market is organised during this fair and people from various tribes and communities exchange their products.” In light of the above paragraph, justify the values of „barter system‟ in the lives of the tribal communities. 3

Ans: Values of barter system in the lives of the tribal community:

(i) The barter system fosters mutual cooperation among the tribal communities.

(ii) This system builds amiable relationship and sharing of goods among themselves.

(iii) Through this system tribal are growing together with good will, mutual respect and welfare and wellbeing of the communities.

Q2. What is the basic function of the World Trade Organisation? 3

Ans: Basic function of World Trade Organisation is-

(i) To act as an international organisation to deal with the global rules of trade between nations.

(ii) It sets the rules for the global trading and resolves the disputes between member nations.

(iii) It is a permanent institution for looking after the promotion of free and fair trade amongst nations.

(iv) WTO also covers trade in services, such as telecommunication and banking, and other issues such as intellectual rights. (Any three points)

Q3. W.T.O. is often criticized for widening the Gap between developed and developing countries. Examine critically.

Ans:

Free trade widening the gulf between rich and poor [influential nations in the WTO focus on their own commercial interests].
Developed countries have not fully opened their markets to products from developing countries.
Issues of health, worker's rights child labour and environment are ignored.

Q4. How is the difference in national resources a basis of international trade? Explain with three examples. 3

Ans: Difference in national resources

National resources are unevenly distributed because of differences in geology, relief, soil and climate
Geology determines the mineral resource base
Topographical differences ensure diversity of crops and animals raised
Climate influences the type of flora and fauna in a given region

Q5. Which are the two types of ports based on location? Write any two features of each type of port. 1+2=3

Ans: On the basis of location there are two types port-

(i) Inland ports

Located away from sea coast
Linked to the sea through a river or canal
Eg- Kolkata on river Hugli

(ii) Out ports

These are deep water ports built away from the actual ports
Serve parent ports by receiving large sized ships unable to reach them
Eg- Athens- out port- Piraeus

Long Questions (5 marks)

Q1. Explain with examples the history of development of International Trade. 5

Ans: Development of International Trade:

In ancient times, transporting goods over long distances was risky, hence trade was restricted to local markets.
Earlier people spent most of their resources on the basis of necessities-food and clothes.
Only the rich people bought jewellery, costly dresses and this resulted in trade of luxury items.
Fifteenth century onwards, the European colonization began along with trade of exotic commodities (a new form of trade emerged which was called slave trade)
After the Industrial Revolution, the industrialised nation imported primary products as raw material and exported the value added finished products to the non-industrialized nations.
In the latter half of the nineteenth century, the industrial nations became each other's principle customers.
Post World War II, organizations like GATT (WTO) was formed to reduce tariffs to regulate International Trade. (Any five points to be explained)

Q2. Explain with examples the population factor as the basis of international trade. 5

Ans: Population factor as the basis of International Trade:

Diversity of people between countries affect the type and volume of goods traded.
Distinctive forms of art and craft develop in certain cultures which are valued the world over. Example China products are the finest porcelains and brocade, carpets of Iran etc.
Densely populated countries have large volume of internal trade but little external trade because most of the production is consumed in the local markets.
High standard of living of the population determines the demand for better quality imported products.
With low standard of living only a few people can afford to buy costly imported goods. Hence, it affects the international trade.

Q3. How are ports helpful for international trade? 5

Ans:

The commercial part of a harbour containing facilities for loading and unloading, and facilities for storage are called ports.
Ports are called gateways of international trade. 90-95% of international trade is carried out through them.
Major part of the international trade is carried out through waterways and ports are two ends of a waterway, they become extremely important.
The ports provide facilities of docking, loading, unloading, storage facilities for cargo.
In order to provide these facilities, the port authorities make arrangements for maintaining navigable channels, arranging tugs and barges, and providing labour and managerial services.

CRITICAL THINKING AND PROBLEM-SOLVING QUESTIONS

1. Imagine you are an international trade advisor. How would you explain the benefits of specialization in production to the government of a developing country?

Answer: As an international trade advisor, I would explain to the government that specialization in production allows a country to focus on industries where it has a comparative advantage, enabling more efficient and cost-effective production. By concentrating resources on sectors with the greatest potential, such as agriculture or natural resources, the country can produce higher-quality goods at a lower cost. This leads to increased productivity and the ability to trade surplus goods with other nations. Specialization opens up global markets for the country's exports, stimulating economic growth and creating jobs. Additionally, by importing goods that are costly to produce domestically, the country can benefit from a wider range of affordable products. This fosters economic interdependence, enhancing the country's overall economic prosperity.

2. How can a developing country improve its trade deficit?

Answer: A developing country can improve its trade deficit by increasing its exports as well as reducing dependence on imports. This can be achieved by adopting several strategies. First, it can diversify its exports, focusing on high-value products with global demand, such as technology, manufactured goods, or specialized agricultural products. Second, it can improve the competitiveness of domestic industries through investment in infrastructure, education, and technology, reducing reliance on imports. Third, by negotiating favourable trade agreements and fostering regional trade blocs, the country can increase exports to neighbouring markets. Additionally, attracting foreign direct investment (FDI) can strengthen industries, allowing them to compete internationally. The country should also implement policies to reduce unnecessary imports, such as promoting the use of local substitutes. Finally, developing a strong domestic savings culture can reduce the need for foreign borrowing and stabilize the economy.

3. “Ports are called the gateways of international trade because most of the international trade of any country is transported through sea routes and ports are the basic infrastructures to access the sea.” Analyse the statement and suggest the measures to improve the port infrastructure of any country?

Answer: Ports are vital for international trade as they act as the primary points of entry and exit for goods, with sea routes being the most cost-effective mode of transportation. Efficient ports facilitate faster movement of goods, reducing costs and improving trade competitiveness. To improve ports, a country can invest in modern infrastructure, such as expanded docking facilities and advanced cargo handling technology. Upgrading transportation links (rail, road) to ports can also improve connectivity. Enhancing port security, introducing automation, and ensuring environmental sustainability are crucial measures. Additionally, streamlined customs procedures and better logistics management can reduce delays and improve overall port efficiency.

4. "Neo-colonialism is the quiet grip of power, where wealth and influence replace armies, and dependency becomes the new form of subjugation." Examine this statement in the light of international trade.

Answer: This statement underscores how neo-colonialism manifests in international trade, where developed countries use economic and political power to exploit developing nations. In this context, wealthy nations often outsource menial, low-wage jobs to poorer countries, such as manufacturing or resource extraction, where labour is cheap. These countries remain dependent on foreign capital and technology while their local industries struggle to grow. This creates a cycle of economic dependency, where developing nations supply raw materials or low cost labour, but receive little benefit from the full value of these goods and services. As a result, neo-colonialism keeps these countries in a subordinate position, reliant on external powers for their economic survival.

5. "In the future of international trade, the world may no longer be a free market, but a network of powerful trade blocs, where cooperation thrives among the few, and global competition becomes a distant memory." Critically examine this statement.

Answer: The statement suggests that future international trade may be dominated by regional trade blocs, replacing the traditional free market. This scenario could lead to enhanced cooperation and economic integration within these blocs, fostering growth and stability. However, it also raises concerns about increased protectionism and reduced global competition, as trade barriers between blocs may limit market access. Developing countries could suffer as their economic opportunities may shrink, and the benefits of global trade may be restricted to a few powerful blocs. Ultimately, while regional trade could boost cooperation, it may undermine global trade, causing fragmentation and inequality in the world economy.

6. Suppose you are an environmental consultant. How would you address the impact of international trade on deforestation and marine life?

Answer: As an environmental consultant, I would emphasize the need for sustainable practices in international trade to mitigate its impact on deforestation and marine life. For deforestation, I would recommend stricter regulations on the trade of timber, agricultural products, and palm oil, ensuring that they are sourced from certified sustainable operations. Additionally, promoting reforestation and agroforestry practices can help restore ecosystems affected by trade. For marine life, I would advocate for the enforcement of sustainable fishing practices and regulations against illegal, unreported, and unregulated fishing. Encouraging trade in certified eco-friendly products, such as sustainable seafood and forest products, along with supporting international agreements on biodiversity, can help strike a balance between economic development and environmental protection.

HIGHER ORDER THINKING QUESTIONS (HOTs)

1. Examine the evolution of international trade. Analyse the importance of development of transport in the development of international trade historically.

Answer: The evolution of international trade can be traced from the early Silk Route, which connected Rome and China, facilitating the exchange of luxury goods like silk, wool, and precious metals. Over time, European colonialism expanded trade, introducing slave trade and exotic commodities. The Industrial Revolution further transformed trade as industrialized nations imported raw materials and exported finished products. In the 19th century, industrial nations became principal customers for each other. The development of transport, particularly the advent of ocean-going warships and later steamships, played a crucial role in expanding international trade. By enabling long-distance travel and faster movement of goods, transportation reduced risks, increased trade volume, and helped connect distant economies, thus driving the growth of global trade networks.

2. Assess the importance of international trade in the economy of a modern nation. How does specialization and the principle of comparative advantage promote trade between nations?

Answer: International trade is vital for a modern nation’s economy as it allows access to resources, goods, and services that may not be available domestically, promoting economic growth and development. It encourages competition, reduces costs, and enhances efficiency by enabling countries to focus on producing goods they can make most efficiently. Specialization allows countries to allocate resources effectively, boosting productivity. The principle of comparative advantage promotes trade by suggesting that nations should specialize in the production of goods they can produce at the lowest opportunity cost. By trading, countries can obtain goods that would be more costly to produce themselves, resulting in mutual benefit, increased efficiency, and better living standards, fostering stronger economic interdependence.

3. Analyse the advantages and disadvantages of regional trade blocs. How do these blocs promote intra-regional trade, and what challenges do they present for global free trade?

Answer: Advantages of Regional Trade Blocs: a. Increased intra-regional trade: Lower tariffs and trade barriers among members foster trade within the bloc. b. Economic growth and development: Easier access to larger markets can boost production and investment, stimulating regional growth. c. Attract foreign investment: Trade blocs make the region more attractive to international investors due to better market access. d. Enhanced cooperation: Member countries collaborate on shared interests, improving economic and political stability within the bloc. Disadvantages of Regional Trade Blocs: a. Exclusion of non-members: Trade barriers may rise for countries outside the bloc, limiting their market access. b. Distortion of global trade: Trade blocs can create inefficient trade patterns, leading to trade diversion. c. Dependence on bloc members: Over-reliance on the bloc's market can hinder broader global trade diversification. d. Economic inequality: Disparities between countries within a bloc may lead to unequal benefits, worsening regional inequality.

4. Assess the role of the World Trade Organization (WTO) in promoting free trade. How does the WTO influence global trade, and why has it been criticized by some developing countries?

Answer: The World Trade Organization (WTO) plays a key role in promoting free trade by regulating international trade agreements, reducing trade barriers, and ensuring fair competition among member countries. It facilitates trade negotiations, resolves disputes, and establishes rules to create a stable and predictable trading environment. Influence on global trade: • Encourages multilateral trade negotiations to lower tariffs. • Promotes trade liberalization and economic integration. • Resolves disputes and enforces agreements between nations. Criticism by developing countries: • Unfair advantage: Wealthier nations are seen to benefit more, as they influence trade policies to suit their interests. • Limited market access: Developing countries face barriers in accessing markets of developed nations. • Neglect of social issues: Environmental, labour, and health standards are often overlooked in trade agreements.

5. Examine the relationship between foreign investment and international trade. How does foreign investment in developing countries boost trade, and what role do industrialized nations play in this process?

Answer: Foreign investment plays a crucial role in boosting trade in developing countries by providing capital for infrastructure, technology, and industry development. It enhances production capabilities, enabling countries to export more competitive goods. Industrialized nations, as primary sources of foreign direct investment, drive this process by investing in sectors like manufacturing and agriculture. They also create demand for raw materials and finished goods from developing nations, strengthening trade ties. Additionally, foreign investment fosters job creation and technology transfer, improving productivity and making developing countries more integrated into global value chains, further promoting international trade.

6. Analyse the environmental concerns related to international trade. How does the increase in global trade lead to resource depletion and environmental degradation, and what role do multinational corporations play in this?

Answer: The increase in global trade leads to resource depletion and environmental degradation as countries prioritize economic growth over sustainability. The demand for raw materials accelerates, causing over-extraction of natural resources such as minerals, timber, and fossil fuels. Deforestation, pollution, and overfishing are some of the harmful consequences. Multinational corporations (MNCs) in industries like oil, gas, mining, and agriculture contribute significantly to this issue. These companies often prioritize profits over environmental regulations, leading to unsustainable practices. Their expansion into developing countries can cause long-term damage, including habitat destruction and contamination of water sources, as they exploit resources without adequate consideration for environmental and health impacts.

Question Bank

Q1. Mention any two problems of barter system of trade. ½+½=1[2019-All India]

Q2. Asses the positive aspect of 'trade liberalisation'. 1 [2016-All India]

Q3. What is an „entrepot port‟? Give an example of it. ½ + ½ = 1 [2016-Foreign]

Q4. Explain how international trade can prove to be detrimental to the nations. 3 [2020-Compartment]

Q5. Explain any three bases of international trade. 1×3=3 [2019-Foreign]

Q6. Why has World Trade Organisation (WTO) been criticized and opposed? Explain any three reasons. 1+2=3 [2019-Compartment]

Q7. Explain three types of seaports classified on the basis of cargo handled by them. 1×3=3 [2019-Compartment]

Q8. “Every January after the harvest season „Jonbeel Mela‟ takes place in Jagiroad, 35 kilometres away from Guwahati and it is possibly the only fair in India, where „barter system‟ is still alive. A big market is organised during this fair and people from various tribes and communities exchange their products.” In light of the above paragraph, justify the values of „barter system‟ in the lives of the tribal communities. 3 [2018-All India]

Q9. Explain with examples the development of International Trade. 5

Explain with examples the population factor as the basis of international trade. 5 [2019-All India]

Q10. “International trade is mutually beneficial to nations.” Analyse the statement. 1×5=5

“The difference in national resources is the basis of international trade.” Analyse the statement. 1×5=5 [2019-Foreign]

Q11. „„In modern times international trade is the basis of the world economy.‟‟ Support the statement with examples. 5´1=5 [2017-All India]

Q12. Why was Silk Route important in ancient times? 3

Q13. Write a short note on balance of trade. 3

Q14. What are impacts of negative balance of trade in a country? 3

Q15. Why is it harmful for a nation to have negative balance of payments? 3

Chapter 8: International Trade - Class 12 Geography Extra Questions