ASIA ECONOMIC UNDERSTANDINGS Specialization, Trade, Trade Barriers, & Exchange Rates Standard SS7E9

ASIA economic UNDERSTANDINGS Standard SS7E9: The student will explain how voluntary trade benefits buyers and sellers in Southern and Eastern Asia. a. Explain how specialization encourages trade between countries. b. Compare and contrast different types of trade barriers, such as tariffs, quotas, and embargoes. c. Explain why international trade requires a system for exchanging currencies between nations.

FIRST FIVE Agenda Message: Standard: Explain how specialization encourages trade between countries. Compare and contrast different types of trade barriers, such as tariffs, quotas, and embargoes. Essential Question: Monday, March 17th; Why do countries trade goods? What is Specialization? Warm-up: Because of Japan’s lack of Natural Resources, what is the source of nearly all of Japan‘s GDP growth? Today We Will: Start Economic Specialization, Trade, & Trade Barriers

answers E.Q. Answer: Countries trade goods because no country has all the resources necessary to efficiently produce everything its people need. Countries specialize in what they do best. Specialization is an efficient way to work, and the cost of items produced is much lower as a result of specialization. Warm-up Answer: Manufacturing, Japan imports the raw materials it needs to feed a very strong manufacturing industry.

FIRST FIVE Agenda Message: Standard: Explain how specialization encourages trade between countries. Compare and contrast different types of trade barriers, such as tariffs, quotas, and embargoes. Essential Question for Tuesday March 18th: List and briefly describe the three types of Trade Barriers. Warm-up: Which countries in S&EA have strong entrepreneurship driving the success of their economies? Today We Will: Complete Economic Trade Start Trade Barriers

answers The three types of trade barriers include: tariffs, quotas, and trade embargoes

FIRST FIVE Today We Will: Agenda Message: Standard: Explain why international trade requires a system for exchanging currencies between nations. Essential Question for Wednesday March 6th: Why do countries need a system to convert different currencies (money) for international trade? Warm-up: What do tariffs and quota trade barriers ultimately do to the cost of imported products? Today We Will: Exchange Rates CDA-4 Study Guide

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FIRST FIVE Agenda Message: Standard: Explain why international trade requires a system for exchanging currencies between nations. Essential Question for Thursday March 6th: List the currencies (Money) for China, India, Japan, Vietnam, & South Korea. Warm-Up: Today We Will: International Currency Exchange

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FIRST FIVE Agenda Message: Standard: Explain how specialization encourages trade between countries. Compare and contrast different types of trade barriers, such as tariffs, quotas, and embargoes. Essential Question: Monday, March 17th; Why do countries trade goods? What is Specialization? Warm-up: Because of Japan’s lack of Natural Resources, what is the source of nearly all of Japan‘s GDP growth? Today We Will: Start Economic Specialization, Trade, & Trade Barriers

answers E.Q. Answer: Countries trade goods because no country has all the resources necessary to efficiently produce everything its people need. Countries specialize in what they do best. Specialization is an efficient way to work, and the cost of items produced is much lower as a result of specialization. Warm-up Answer: Manufacturing, Japan imports the raw materials it needs to feed a very strong manufacturing industry.

ASIA economic UNDERSTANDINGS Specialization Helps Everyone Countries trade goods because no country has all the resources necessary to efficiently produce everything its people need. Every country has different natural resources, human capital, capital, and entrepreneurial resources.

ASIA economic UNDERSTANDINGS Countries specialize in what they do best. Specialization is an efficient way to work, and the cost of items produced is much lower as a result of specialization. Specialization encourages trade between countries because country “A” can get what it needs at the lowest possible cost when it is produced by country “B” that specializes in making that item.

ASIA economic UNDERSTANDINGS One example of specialization is trade between Australia and Japan. Japan has few natural resources, however, it has developed industries like automobile manufacturing. Japan buys many of the raw materials from Australia, a country rich in natural resources. Japan “specializes in” auto manufacturing. Australia “specializes in” exporting raw materials. In the end, Australia imports lots of cars from Japan!

“Do what you do best; trade for the rest.” Specialization - Specialization occurs when one nation can produce a good or service at a lower opportunity cost than another nation. Specialization encourages trade and can be a positive factor in a country’s economy. For example, if a country specializes in oil, they can trade oil for a certain food that another country specializes in so that both countries benefit.

ASIA economic UNDERSTANDINGS Barriers to Trade Countries sometime set up trade barriers to restrict trade. Why? The reason is that they want to produce their own goods and sell them in their own country. These trade barriers include tariffs, quotas, and trade embargoes.

ASIA economic UNDERSTANDINGS Tariff A tariff is a “tax” placed on imported goods. Tariffs cause the consumer to pay a higher price for an imported item, increasing the demand for a lower-priced item produced domestically.

ASIA economic UNDERSTANDINGS Quota A quota is a “restriction, or limit, on the amount of goods or products that can be imported into a country”. Quotas will often cause shortages that ultimately force prices to rise.

ASIA economic UNDERSTANDINGS Standard SS7E9: The student will explain how voluntary trade benefits buyers and sellers in Southern and Eastern Asia. a. Explain how specialization encourages trade between countries. b. Compare and contrast different types of trade barriers, such as tariffs, quotas, and embargoes. c. Explain why international trade requires a system for exchanging currencies between nations.

FIRST FIVE Agenda Message: Standard: Explain how specialization encourages trade between countries. Compare and contrast different types of trade barriers, such as tariffs, quotas, and embargoes. Essential Question for Tuesday March 18th: List and briefly describe the three types of Trade Barriers. Warm-up: Which countries in S&EA have strong entrepreneurship driving the success of their economies? Today We Will: Complete Economic Trade Start Trade Barriers Complete a graphic organizer (groups)

answers The three types of trade barriers include: tariffs, quotas, and trade embargoes

ASIA economic UNDERSTANDINGS Trade Embargoes Trade embargoes “forbid or stops trade completely” with another country.

ASIA economic UNDERSTANDINGS Examples of Trade Barriers In the 1980’s, quotas were set restricting how many Japanese cars could be imported into the U.S. to protect the U.S. car manufacturing industry. India imposes tariffs on agricultural products in order to protect its own farming industry.

ASIA economic UNDERSTANDINGS Examples of Trade Barriers cont. Beginning in 2001, the U.S. imposed tariffs on steel imported from China, India, and several other nations to protect the U.S. steel industry. In 2005, the U.S. imposed temporary quotas on certain types of cotton clothing from China in order to protect U.S. clothing manufacturers.

ASIA economic UNDERSTANDINGS Examples of Trade Barriers cont. After the Vietnam War, the United States imposed a trade embargo against Vietnam to pressure the Vietnamese government to provide information on Americans missing in action (MIA’s) during the war.

ASIA economic UNDERSTANDINGS Other People’s Money/Foreign Exchange Because every country does not use the same type of money, international trade requires a system for exchange of currencies between nations. That system is called foreign exchange. The exchange rate is how much one currency is worth in comparison of the other.

ASIA economic UNDERSTANDINGS Examples of currencies in Asia include the Japanese yen, the Indian rupee, the Vietnamese dong, the South Korean won, and the Chinese yuan.