Trading bloc, A group of participating countries that allow free trade between them. There are no tariffs or trade barriers in place between the participating countries e.g. EU, USMCA, Mercosur, Importance of Trading Blocs for Irish business, Access to Larger Markets without tariffs/charges – e.g. EU over 450 million consumers, Lower Costs – Source raw materials, equipment, and components more cheaply, Free Movement of Labour and Capital – Easier to find skilled staff, and attract investment, Common Standards and Regulations – Same standards apply across EU, no need to adapt, Identify the trading blocs most relevant for Irish businesses, EU, USMCA, Mercosur, What does USMCA stand for, United States–Mexico–Canada Agreement, Who are Mercosur countries, Its full members are Argentina, Bolivia, Brazil, Paraguay, and Uruguay., Evaluate Ireland’s membership of the EU from the perspective of the economy, Economic growth, improved infrastructure, increased FDI, loss of power for decision-making, Evaluate Ireland’s membership of the EU from the perspective of businesses, Higher sales, lower costs, access to labour, common currency, greater regulations and competition, Evaluate Ireland’s membership of the EU from the perspective of consumers, Greater choice, lower prices, enhanced rights (e.g. GDPR), increased freedom of movement, Outline the factors to be considered when trading internationally, Taxes and tariffs, Increased costs, Exchange rate, Varying regulation, More competition, Language and culture, Taxes and tariffs (Outline the factors to be considered when trading internationally), No import duties within EU, but imposed outside adding to the price they would sell at., Increased costs (Outline the factors to be considered when trading internationally), May require extra transportation, storage, marketing, and local staffing costs., Exchange rate (Outline the factors to be considered when trading internationally), No fluctuations when trading within EU, outside if foreign currencies weaken versus Euro, demand for Irish exports would fall / they become relatively more expensive., Varying regulation (Outline the factors to be considered when trading internationally), Business may need to adjust their product/service, production, packaging, marketing based on different rules around product safety, data protection, and labour laws in non-EU countries., More competition (Outline the factors to be considered when trading internationally), Market research needed to adjust product/service against a variety of competition in other countries., Language and culture (Outline the factors to be considered when trading internationally), Businesses need to adjust actions based on local language, customs, and business etiquette, Why Irish businesses trade globally, Ireland is a relatively small economy (5 million) – selling outside increased the market size, allows for higher output (economies of scale), and spreads risk across more markets (diversification), Benefits: (Why Irish businesses trade globally), Increased sales (bigger markets), allows for cost efficiencies from higher output (economies of scale), helps identify new markets, and spreads risk across more markets (diversification), Challenges: (Why Irish businesses trade globally), Higher taxes (customs), higher costs (transport..), exchange rate fluctuations, varying regulation between markets, increased competition, language and culture adjustments to product/processes, Distinguish between the balance of payments and the balance of trade: Balance of Trade -> VISIBLE exports - VISIBLE imports, Balance of Payments -> TOTAL exports – TOTAL imports, Distinguish between the balance of payments and the balance of trade: Visible exports > Visible imports = B. of Trade surplus, Total exports > Total imports = B. of Payments surplus, Distinguish between the balance of payments and the balance of trade: Visible exports < Visible imports = B. of Trade deficit, Total exports < Total imports = B. of Payments deficit, Positive and negative impact of Irish organisations trading internationally, Political risks, Financial risks, Cultural barriers, Social impact, Environmental, Political risks (Positive and negative impact of Irish organisations trading internationally), Changes in foreign governments, trade wars, or instability can disrupt markets, Financial risks (Positive and negative impact of Irish organisations trading internationally), Exports to non-EU countries face the risk of currency fluctuations and market instability, Cultural barriers (Positive and negative impact of Irish organisations trading internationally), Misunderstandings or poor adaptation to local customs and consumer behaviour, Social impact (Positive and negative impact of Irish organisations trading internationally), Outsourcing of jobs from Ireland; labour issues in non-EU countries; homogenisation, Environmental (Positive and negative impact of Irish organisations trading internationally), Higher carbon emissions; overexploitation of natural resources; sustainability issues, Explain how globalisation can increase interdependence, Increased interdependence between economies and countries as the world is being treated like one marketplace, Consequences of globalisation for businesses, + Access to larger markets; + Access to cheaper or better suppliers; - Greater exposure to supply chain disruptions; - Vulnerability to financial shocks, Consequences of globalisation for consumers, + Increased choice; + Lower prices; - Less ethical consumption; - Cultural homogenisation; - carbon footprint, Trade (Evaluate the role of technology in globalisation), Improved distribution through information and communication technologies. AI allows more dynamic planning of inventory and improves forecasting of stock, Work Practices (Evaluate the role of technology in globalisation), Increased remote collaboration and flexible work arrangements. New working models, easier to start freelancing and gig employment (e-commerce), Business Operations (Evaluate the role of technology in globalisation), Improved marketing (adaptive reach to target segment demographics); Deep research used to research markets/competitors; e-commerce platforms; disrputive industries, FDI, Foreign Direct Investment (FDI) occurs when a company or individual from one country invests directly in facilities, operations, or businesses in another country, How Ireland Attracts FDI, Workforce, Pro-enterprise, Market Access, R&D, How Ireland Attracts FDI: Workforce, Invests in education and training, especially in areas like technology, science, and engineering., How Ireland Attracts FDI: Pro-enterprise, Low corporation tax (12.5/15%), IDA promote opportunities, business-friendly regulations, How Ireland Attracts FDI: Market Access, Gateway to EU market, English as first language, suits American MNCs, How Ireland Attracts FDI: R&D, IDA provides R&D activities through grants, tax credits, and innovation hubs., IDA Ireland, IDA Ireland is responsible for the attraction and development of foreign direct investment in Ireland., Grants (IDA Ireland), Employment Grants (for creating jobs), Research, Development & Innovation (RD&I) Grants, Capital Grants (For the purchase of equipment or the construction/fit-out of new facilities.), Provide Key Data (IDA Ireland), Researches, compiles and provides key information and statistics on business sectors, Network / Links (IDA Ireland), Connects foreign investors to local industry, Education Links (IDA Ireland), Ensure the right skills in educational, academic research centres for FDI, Outline the contribution of Foreign Direct Investment to the Irish economy, Employment, Revenue, Research, Infrastructure, Innovation., Employment (Outline the contribution of Foreign Direct Investment to the Irish economy), Opportunities - Over 300,000 employed in MNCs. Over half new investment outside Dublin. Challenges - Relocation of American MNCs / Tariffs Global tech layoffs / tech developments, Revenue (Outline the contribution of Foreign Direct Investment to the Irish economy), Opportunities - >80% CPT revenue from MNCs (2024). Challenges - Over-reliance on a small number of MNCs for a large percentage of our tax revenue, Research (Outline the contribution of Foreign Direct Investment to the Irish economy), Opportunities - Irish govt supports and incentivises R&D through IDA, making Ireland an R&D hub. Challenges - Higher start-up costs in Ireland, skills shortages in areas, Infrastructure (Outline the contribution of Foreign Direct Investment to the Irish economy), Opportunities - Rural development through enterprise zones and tax incentives. Challenges - Pressure on infrastructure from MNCs, housing/rent prices, energy (data centres), Innovation (Outline the contribution of Foreign Direct Investment to the Irish economy), Opportunities - Growth of specialised innovation clusters, brings in new tech, practices, and expertise. Challenges - Vulnerable to MNCs relocating if over reliant on them for R&D activities

Chapter 5 Key Takeaways

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