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.
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Not every country can produce all the goods and
services it needs. Because of this, countries
specialize in producing those goods and services
they can provide best and most efficiently. They
look for others who may need these goods and
services so they can sell their products. The
money earned by such sales then allows the
purchase of goods and service that the first
country is unable to produce.
Japan specializes in “Hello Kitty" products,
among many others.
2
In international trade, no country can be
completely self-sufficient. That means that
no country can produce all the goods and
services it needs. Specialization creates a
way to build a profitable economy and to
earn money to buy the items that
cannot be made locally.
Above are images of a pearl farm, an industry in which the
countries of Vietnam and Japan specialize.
3
The countries in Southern and Eastern
Asia are very different in terms of how
their economies are organized. India has
a lot of farm land, but the population is
so large it is often difficult to grow
enough food for everyone.
Above: Images from a goat farm in India.
4
India has a booming industrial and
technological economy. This
specialization makes it possible for an
economy as enormous as that of India
to focus on those businesses
that are most profitable.
5
The country of China has also focuses on
those businesses that the Chinese have
found to be the most profitable. Some
areas of the country are almost all
agricultural. Others areas have large
cities and modern industries.
6
Japan is a country with very few
natural resources, so specialized
industries have been developed to
earn money needed to buy food and
raw materials from other countries.
7
North Korea has had many problems in their
attempts to improve harvests on their farms. As a
result, the North Korean government has had to
turn to industries that use the country’s natural
resources like iron and coal in order to keep the
63349866
economy going. Specialization
allows countries like
North Korea to produce what they produce best
and generate income to buy what they still need.
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SS7E9
The student will explain how
voluntary trade benefits buyers
and sellers in Southern
and Eastern Asia.
b. Compare and contrast
different types of trade
barriers such tariffs, quotas
and embargoes.
9
Trade barriers are anything that slows
down or prevents one country from
exchanging goods with one another.
Some trade barriers are put in place
to protect local industries from lower
priced goods made in other countries.
10
Other times trade barriers are created
due to political problems between
countries. Trade is stopped until the
political issues are settled. The countries
in Southern and Eastern Asia, as in
most parts of the world, have experienced
trade barriers at one time or another.
11
A tariff is a tax placed on goods when they are
brought into, or imported, from one country to
another country. The purpose of a tariff is usually
to make the imported item more expensive than a
similar item made locally. This sort of tariff is
called a protective tariff because it protects
local manufactures from competition coming from
cheaper goods made in other countries.
12
A quota is a different way of limiting
the amount of foreign goods that can
come into the country. A quota sets a
specific amount or number of a
particular product that can be imported
or acquired in a given period of time.
13
A third type of trade barrier is called an
embargo. An embargo is when one country
announces that it will no longer trade with
another country in order to isolate the
country and cause problems with that
country’s economy.
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Embargos usually com about when
two countries are having political
disputes. Embargos often
cause problems for all
countries involved.
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SS7E9
The student will explain how
voluntary trade benefits buyers
and sellers in Southern
and Eastern Asia.
c. Explain why international trade
requires a system for exchanging
currencies between nations.
16
Most of the countries in Southern and
Eastern Asia have their own type of
currency, or money. In order for them to
pay for goods as they trade with each
other, they have to establish a system
for changing one type of currency to
another. This system is known
as an exchange rate.
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Countries also have to be able to exchange
their currencies with those used by other
countries around the world. The currency of
the U.S. is based on the dollar. Much of the
currency in Western Europe is called the Euro.
In Southern and Eastern Asia, there are many
types of currency. In order for them to trade
with each other, they have to be able to figure
out what goods cost in each currency.
Images of Indonesian (left) and (right) Indian currency.
18
Country
Currency
Equivalent in
U.S. Dollars
United States
dollar $
$1.00
India
rupee
41.5 per dollar
China
yuan
7.16 per dollar
Japan
yen
117 per dollar
North Korea
won
140 per dollar
Vietnam
dong
16, 000 per
dollar
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