NCERT Solutions for Class 12 Geography Fundamentals of Human Geography Chapter 8: International Trade

Chapter at a glance

Exercise Questions

Question 1 (i)

Most of the world’s great ports are classified as:
(a) Naval Ports (b) Oil Ports (c) Comprehensive Ports (d) Industrial Ports

Answer

Comprehensive ports handle bulk and general cargo in large volumes. Most of the world’s great ports (e.g. Rotterdam, Singapore, Shanghai, New York) are classified as comprehensive ports.

3. Comprehensive Ports

Question 1 (ii)

Which one of the following continents has the maximum flow of global trade?
(a) Asia (b) North America (c) Europe (d) Africa

Answer

Europe has the maximum share of global trade (the EU countries trade intensively among themselves and with the world), followed by Asia and North America.

3. Europe

Question 2 (i)

What is the basic function of the World Trade Organisation?

Answer

The World Trade Organisation (WTO), set up on 1 January 1995 (headquarters: Geneva), replaced GATT. Its basic function is to set the rules for the global trading system and resolve disputes between its member nations. It also covers trade in services (telecommunications, banking) and other issues such as intellectual property rights, and works to reduce trade barriers and promote free trade.

The WTO’s basic function is to set the rules of the global trading system and to resolve trade disputes between member nations, while promoting free trade by reducing barriers in goods, services and intellectual property.

Question 2 (ii)

Why is it detrimental for a nation to have negative balance of payments?

Answer

A negative (unfavourable) balance of payments means that a country’s payments for imports (of goods and services) exceed its receipts from exports. It is detrimental because: 1. It leads to the depletion of foreign exchange reserves. 2. The country may have to borrow from abroad, increasing foreign debt and interest burden. 3. It may lead to depreciation of the national currency, making imports costlier and causing inflation. 4. It reduces the country’s creditworthiness and may lead to economic crisis (e.g. India’s 1991 crisis).

A negative balance of payments means spending on imports exceeds earnings from exports; it depletes foreign exchange reserves, forces foreign borrowing and debt, can weaken the currency and raise inflation, and may lead to an economic crisis.

Question 2 (iii)

What benefits do nations get by forming trading blocs?

Answer

Regional trade blocs (e.g. EU, ASEAN, SAFTA, NAFTA/USMCA) are formed to encourage trade between countries with geographical proximity, similarity and complementarity in trading items, and to curb restrictions on trade. Benefits: 1. Removal of trade barriers – tariffs and duties are reduced or removed among members, increasing trade. 2. Larger market for goods and services; economies of scale. 3. Economic cooperation and growth; attracting investment. 4. Stronger bargaining power in global trade negotiations. 5. Political and economic stability in the region.

Trading blocs remove or reduce trade barriers among members, give access to larger markets and economies of scale, promote economic cooperation, investment and growth, strengthen members’ bargaining power in global trade, and foster regional stability.

Question 3 (i)

How are ports helpful for trade? Give a classification of ports on the basis of their location.

Answer

How ports help trade: 1. Ports are the chief gateways of the world of international trade. Through them, cargo and passengers pass from one part of the world to another. 2. They provide facilities for docking, loading, unloading and storage of cargo; navigation facilities, warehouses, cranes, container terminals. 3. They connect sea routes with land transport (railways, roads) to the hinterland, linking producers and consumers. 4. The importance of a port is judged by the size of cargo and the number of ships handled; the quantity of cargo indicates the level of development of its hinterland. 5. Ports stimulate industries (port-based industries) and urban growth.

Classification of ports on the basis of location: 1. Inland ports – located away from the sea coast; linked with the sea through a river or a canal; accessible to flat-bottomed ships or barges. E.g. Manchester (linked by a canal), Memphis (on the Mississippi), Rhine ports like Mannheim and Duisburg, Kolkata (on the Hugli, a branch of the Ganga). 2. Out ports – deep-water ports built away from the actual ports. They serve the parent ports by receiving those ships which are unable to approach them due to their large size. E.g. Piraeus in Greece is an out port for its parent port Athens.

(Ports are also classified by the types of cargo — industrial, commercial, comprehensive — and by functions — oil ports, ports of call, packet stations, entrepot ports, naval ports.)

Ports are gateways of international trade: they provide docking, loading, unloading, storage and navigation facilities, link sea routes with land transport to the hinterland, and stimulate industry and urban growth. By location, ports are inland ports — away from the coast and linked to the sea by a river or canal (Manchester, Memphis, Kolkata) — and out ports — deep-water ports serving parent ports that large ships cannot reach (Piraeus for Athens).

Question 3 (ii)

How do nations gain from International Trade?

Answer

1. Specialisation and comparative advantage – international trade is the result of specialisation in production. Each country produces what it can produce most efficiently (based on its resources, climate, skills) and exchanges for goods it cannot produce or produces at higher cost; this benefits the world economy.
2. Access to goods not available domestically – no country is self-sufficient; trade allows nations to obtain raw materials, minerals, fuels (e.g. petroleum), food, technology and manufactured goods they lack.
3. Larger markets – exports give producers access to world markets, allowing large-scale production, economies of scale, and growth of industries.
4. Economic growth and employment – trade promotes production, investment, employment and income.
5. Foreign exchange – exports earn foreign exchange needed for imports and development.
6. Technology transfer and competition – trade brings new technologies, ideas and better quality products; competition improves efficiency.
7. Consumer benefits – variety of goods at lower prices.
8. Cultural exchange and cooperation – trade promotes cultural interaction, mutual dependence and peaceful relations.

Possible disadvantages: dependence on other countries, unequal terms of trade for poor countries, exploitation of resources, dumping, environmental damage — so trade must be fair and sustainable.

Nations gain from international trade through specialisation and comparative advantage, access to goods and resources they lack, larger markets and economies of scale, economic growth and employment, foreign exchange earnings, transfer of technology and competition, cheaper and more varied goods for consumers, and cultural exchange — though trade must be fair to avoid dependence and exploitation.

Topic checklist

• ☒ Ports and their classification (Q 1 (i), 3 (i))
• ☒ Direction of trade; trading blocs (Q 1 (ii), 2 (iii))
• ☒ WTO and balance of payments (Q 2 (i), 2 (ii))
• ☒ Gains from international trade (Q 3 (ii))

Total questions answered: 7 of 7