Chapter 18: International Trade and Competitiveness
Explainer, notes, worksheet and data.
What you'll learn in this chapter
- interpret Irish trade patterns (goods vs services) and evaluate benefits/costs for Ireland
- describe the Balance of Payments (current, capital and financial accounts)
- explain what determines competitiveness
- apply comparative advantage to explain trade specialisation
- debate free trade vs protectionism vs fair trade arguments
- explain exchange rate determinants and impacts on the Irish economy
- evaluate trade agreements and global institutions in managing trade
Core ideas
Trade lets countries specialise and expand consumption possibilities, but it can also expose the economy to external shocks. You’ll connect competitiveness and exchange rates to exports/imports, employment and living standards.
Exam focus
- definitions: visible/invisible trade, BOP, competitiveness
- applied questions: how a euro appreciation/depreciation affects exports, imports and inflation
- evaluation: protectionism vs free trade, using Irish examples and clear trade-offs
Interactive: Comparative Advantage Calculator
Comparative advantage exists when a country can produce a good at a lower opportunity cost than another country — even if one country is absolutely better at producing both goods.
Enter how many units each country can produce per hour of labour, then read off who should specialise in what.
Live Exchange Rates
Euro exchange rates against major world currencies, sourced live from the ECB reference rate database. Click a pair to view its history; default view shows all pairs indexed to January 2020 = 100.
Source: ECB Statistical Data Warehouse — daily reference rates, monthly averages shown. Note: USD/ARS (Argentine Peso) excluded — ECB does not publish ARS reference rates due to Argentina's dual exchange rate system.