Economic Interdependence Francisci WG.9(a)

Remember: Interdependence: When nations must trade for resources they do not have. Global trade market exists to import and export goods, services, and capital resources. Export: Shipping of goods or services out of a country. Import: Bringing in of goods and services into a country.

Factors that Influence Economic Activity: Access to human, natural and capital resources 1. Skilled Workers – More in developed countries 2. Natural Resources – If a country gathers its resources and exports them, that country is probably developing.

Factors that Influence Economic Activity: 3. Technology – Developed countries have better access to new technology. 4. Transportation – Developed countries well constructed and strong infrastructure. 5. Investment Capital – Developed countries have more capital resources.

Factors that Influence Economic Activity: Location and ability to exchange goods 1. Landlocked Countries: Country that is completely surrounded by land with no access to a sea or ocean (Water is the cheapest way to transport goods). Ex. Paraguay, Democratic Republic of the Congo. 2. Coastal and Island Countries: Have greater access to seas and/or oceans to transport goods cheaply. Ex. Japan, U.S. and UK.

Factors that Influence Economic Activity: 3. Proximity to Shipping Lanes: Countries located near major trade routes have an economic advantage. Ex. Singapore, Egypt (Suez Canal), Panama (Panama Canal). 4. Communication Networks: Developed countries have a stronger infrastructure which makes it easier to communicate within the country and with other regions as well.

What is Comparative Advantage? Comparative Advantage: The ability of countries to produce goods and services at lower relative costs than other countries, resulting in exports of goods and services.

Why does Comparative Advantage exist? Comparative advantage exists because of the unequal distribution of natural resources across Earth’s surface (this is very good for developing countries).

Effects of Unequal Distribution of Natural Resources: Countries specialize in goods and services they can market for a profit (Countries usually produce goods and services that use their own available natural resources). Countries exchange goods & services A country will export (exit the country) what it can market. A country will import (into the country) what it needs. Trade: The exchange of goods and services between countries.

Effects of Comparative Advantage on International Trade: Countries produce goods and services they can market for a profit. Workers develop specific skills (specialization of labor). Nations develop specific industries (Ex. steel industry, aircraft production, automobile industry, clothing industry).

Russia’s uses of Natural Resources: Numerous resources (minerals, metals, oil, and natural gas). Natural resources are located in areas that are not economically profitable to develop.

United States use of Natural Resources: Diversified economy Abundant natural resources (forests, freshwater, oil and mineral deposits, along with fertile soil, coal and natural gas). Specialized industries

Switzerland’s use of Natural Resources: Limited natural resources (iron, manganese, some coal) Produce services on global scale Ex. Known for banking industry on global market

Japan’s use of Natural Resources: Highly industrialized (developed) Major manufacturing region (cars like Honda, Toyota and Mitsubishi, electronics like Sony, Panasonic, etc). Very limited natural resources Most valuable resource is skilled labor (human resource).

Cote d’Ivoire (kout divwar) use of Natural Resources: Cote d’ivoire: a republic in western Africa on the Gulf of Guinea; one of the most prosperous and politically stable countries in Africa. Limited natural resources Cash crops exchanged for manufactured goods (commercial farming)