5
Irish Business Globally and Internationally
Back in Business · Strand 1: Leading in Business
11 Learning
Outcomes
Outcomes
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5.1
Explain what is meant by a trading bloc and discuss why they are important for businesses in the Irish economy
Explain / Discuss
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EXPLAIN / DISCUSSGive a clear definition of a trading bloc, the different types, and at least two reasons why they matter for Irish businesses, with an Irish example for each.
What is a Trading Bloc?
A trading bloc is a group of countries that agree to reduce or remove trade barriers between them. This makes it easier and cheaper to trade. The WTO manages trading blocs globally and promotes free and fair trade.
+Types of Trading Bloc
Free trade area: members reduce or remove tariffs between themselves. Each country keeps its own tariffs on outsiders. E.g. USMCA.
Customs union: members trade tariff-free AND apply shared tariffs on outsiders. E.g. Mercosur.
Common market: free movement of goods, services, capital AND people. The deepest form. E.g. EU.
+Customs union: members trade tariff-free AND apply shared tariffs on outsiders. E.g. Mercosur.
Common market: free movement of goods, services, capital AND people. The deepest form. E.g. EU.
Why Trading Blocs Matter for Irish Businesses
Access to larger markets: EU gives Irish businesses tariff-free access to 450m+ consumers, helping exporters grow beyond the small Irish market. However, this also increases competition from EU imports.
Lower costs: source inputs from EU without tariffs, improving margins. However, domestic producers can face cheaper competition.
Free movement of labour: recruit workers from 27 EU countries to fill skills gaps. However, this can also pressure wages and housing.
Common standards: meet EU rules once, sell across all 27 states without further adaptation.
+Lower costs: source inputs from EU without tariffs, improving margins. However, domestic producers can face cheaper competition.
Free movement of labour: recruit workers from 27 EU countries to fill skills gaps. However, this can also pressure wages and housing.
Common standards: meet EU rules once, sell across all 27 states without further adaptation.
5.2
Identify the trading blocs most relevant for Irish businesses
Identify
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IDENTIFYName the trading bloc and state clearly why it is relevant to Ireland, using data where possible.
The EU (European Union)
Ireland is a full EU member. In 2023, 37% of Irish exports went to EU countries.
+USMCA (US, Mexico, Canada)
Ireland is not a member. The US is Ireland's biggest single export market — ~30% of exports in 2023.
+Mercosur (South America)
Brazil, Argentina, Uruguay, Paraguay. Ireland imported over €1bn from South America in 2023.
+5.3
Evaluate Ireland's membership of the EU from the perspective of the economy, businesses, and consumers
Evaluate
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EVALUATEExamine evidence and make a judgement. A strong answer gives a positive and negative for each perspective (economy, business, consumer), and uses evidence to support each point.
Economy
+ Economic growth and FDI
Economic growth and FDI. EU membership attracts US multinationals who use Ireland as an English-speaking EU gateway, creating jobs and significant tax revenue. E.g. Google, Apple and Pfizer all chose Ireland as their EU base, directly because of single market access. However, over-reliance on a small number of MNCs is a risk if they relocate.
++ EU Funding and Infrastructure
EU funding. Ireland receives CAP (Common Agricultural Policy) and ERDF (European Regional Development Fund) funding. This has supported agriculture, infrastructure and rural communities. E.g. CAP funding supports Irish farmers, helping the agri-food sector compete in European markets. However, Ireland's share has reduced over time as the country has become wealthier relative to other EU states.
+− Loss of Sovereignty
Loss of sovereignty. The ECB sets interest rates for the whole eurozone — Ireland cannot adjust rates to suit its own conditions. EU law takes precedence over Irish law. This limits the government’s ability to respond to Ireland-specific economic challenges.
+Businesses
+ Increased Sales and Market Access
Tariff-free market access. Irish businesses can sell to 450m+ EU consumers without tariffs or customs checks, making exports more competitive. However, they also face stronger competition from cheaper EU imports.
++ Labour Mobility and Common Currency
Labour mobility: recruit skilled workers from 27 EU countries, helping fill gaps in healthcare, construction and hospitality. However, this can add pressure on housing and public services.
Euro: removes exchange rate risk and transaction costs when trading across the EU. However, Ireland cannot devalue its currency to boost competitiveness during a downturn.
+Euro: removes exchange rate risk and transaction costs when trading across the EU. However, Ireland cannot devalue its currency to boost competitiveness during a downturn.
− Regulation and Competition
Regulation: EU compliance adds cost and complexity, particularly for smaller businesses.
Competition: Irish businesses face competition from cheaper EU imports — e.g. Aldi and Lidl from Germany. These costs are real, though market access benefits generally outweigh them.
+Competition: Irish businesses face competition from cheaper EU imports — e.g. Aldi and Lidl from Germany. These costs are real, though market access benefits generally outweigh them.
Consumers
+ Choice, Lower Prices and Rights
Choice and prices: the single market gives Irish consumers access to EU goods without import taxes, widening choice and lowering prices. However, this can put pressure on Irish domestic producers who cannot compete on price alone.
Stronger rights: EU law enforces consistent consumer protections — GDPR, return policies, air passenger rights and food labelling — across all 27 states.
+Stronger rights: EU law enforces consistent consumer protections — GDPR, return policies, air passenger rights and food labelling — across all 27 states.
+ Freedom of Movement
Freedom of movement. Irish citizens can travel, work and study across all 27 EU states without a visa, opening major education and career opportunities. E.g. the Erasmus programme allows Irish students to study abroad as part of their degree.
+− Pressure on Irish Producers
Pressure on Irish producers. Increased competition from EU imports can reduce demand for Irish-made goods. Consumers may choose cheaper foreign alternatives, making it harder for smaller Irish producers to compete on price.
+5.4
Outline the factors to be considered when trading internationally
Outline
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OUTLINEGive the main points. Name each factor and explain briefly how it affects a business expanding into international markets.
Taxes and Tariffs
Exam note: The spec names six factors. Sample papers have also accepted logistics and distribution and legal and regulatory requirements as valid outline answers.
Taxes and tariffs. Selling outside a trading bloc means facing import taxes that make Irish goods more expensive for foreign buyers. VAT and corporation tax rules also vary between countries.Increased Costs
Increased costs. International trade adds transport, logistics, storage and insurance costs not present in domestic sales. These must be built into pricing or they will reduce profit margins.
+Exchange Rates
Exchange rates. A change in the value of a foreign currency affects the euro value of export revenue. A strong euro makes Irish goods more expensive abroad; a weak euro makes them cheaper.
+Varying Regulation
Varying regulation. Each country has its own laws on product standards, labelling, data protection and health and safety. Non-compliance can result in fines or product bans.
+More Competition
Competition. Entering foreign markets means competing with established local and global rivals who may have stronger brand recognition, lower costs or better distribution networks.
+Language and Culture
Language and culture. Consumer preferences, habits and business norms differ between countries. Packaging and marketing may need to be adapted for each new market.
+5.5
Explain why Irish businesses trade globally and compare the challenges and benefits of trading internationally
Explain / Compare
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EXPLAIN / COMPAREIreland is described as a small open economy. Explain what this means and give reasons why Irish businesses look beyond the domestic market, noting both the benefits and challenges they face.
Ireland as a Small Open Economy
Ireland has a population of ~5.3 million — too small to support major business growth on its own. As a result, Ireland depends heavily on international trade to grow. Total Irish exports exceed €200 billion a year. This is what makes Ireland a small open economy.
+Why Irish Businesses Trade Globally — Benefits
Larger markets: sell to millions more customers beyond the small Irish market. E.g. Kerrygold exports to 110+ countries.
Spread risk: if one market slows, others can compensate. Revenue is not dependent on a single economy.
Economies of scale: more volume means lower cost per unit, improving competitiveness.
Global resources: access materials, technology and expertise not available or affordable in Ireland.
+Spread risk: if one market slows, others can compensate. Revenue is not dependent on a single economy.
Economies of scale: more volume means lower cost per unit, improving competitiveness.
Global resources: access materials, technology and expertise not available or affordable in Ireland.
Challenges of Trading Globally
Currency risk: exchange rate changes affect how much euro revenue the business receives from foreign sales.
Logistics costs: shipping internationally is more expensive than domestic delivery.
Regulation: different laws in every country add complexity and compliance costs.
Competition: established rivals in each new market with existing customers and distribution advantages.
+Logistics costs: shipping internationally is more expensive than domestic delivery.
Regulation: different laws in every country add complexity and compliance costs.
Competition: established rivals in each new market with existing customers and distribution advantages.
5.6
Distinguish between balance of payments and balance of trade, and calculate both
Distinguish / Calculate
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DISTINGUISH / CALCULATEMake the difference between the two terms clear. Then apply the formulas using the figures given. Always show your workings and state clearly whether the answer is a surplus or deficit.
Visible vs Invisible Exports and Imports
Visible: physical goods that can be seen and touched — e.g. pharmaceuticals, food, machinery. Count in balance of trade.
Invisible: services that cannot be physically shipped — e.g. software, tourism, financial services. Count in balance of payments but NOT balance of trade.
+Invisible: services that cannot be physically shipped — e.g. software, tourism, financial services. Count in balance of payments but NOT balance of trade.
Balance of Trade
Measures visible exports minus visible imports — goods only.
Formula: Visible Exports − Visible Imports
Surplus: exports > imports Deficit: imports > exports
+Formula: Visible Exports − Visible Imports
Surplus: exports > imports Deficit: imports > exports
Balance of Payments
Measures ALL exports minus ALL imports — goods and services.
Formula: (Visible + Invisible Exports) − (Visible + Invisible Imports)
Surplus: total exports > total imports Deficit: total imports > total exports
+Formula: (Visible + Invisible Exports) − (Visible + Invisible Imports)
Surplus: total exports > total imports Deficit: total imports > total exports
How changes affect each measure:
An increase in visible exports → improves both balance of trade and balance of payments.
An increase in invisible exports → improves balance of payments only (not balance of trade).
An increase in visible imports → worsens both.
An increase in invisible imports → worsens balance of payments only.
Balance of Trade = Visible Exports − Visible Imports
Balance of Payments = Total Exports − Total Imports
An increase in visible exports → improves both balance of trade and balance of payments.
An increase in invisible exports → improves balance of payments only (not balance of trade).
An increase in visible imports → worsens both.
An increase in invisible imports → worsens balance of payments only.
Balance of Trade = Visible Exports − Visible Imports
Balance of Payments = Total Exports − Total Imports
🔢 Balance Calculator — enter your own figures to practise
5.7
Evaluate the impact of Irish organisations trading internationally — positive, negative, social and environmental impacts of globalisation
Evaluate
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EVALUATEExamine evidence and make a judgement. Cover both positive and negative impacts. The textbook organises these under political risks, financial risks, and cultural barriers.
+ Positive Impacts of Globalisation for Irish Businesses
Larger market access. Irish businesses can reach customers worldwide. E.g. Kerrygold exports to 110+ countries. However, global markets also bring greater competition and operational complexity.
FDI and innovation. Globalisation brings MNCs to Ireland, creating jobs and improving technology and skills. E.g. Google, Meta, Pfizer in Ireland. However, over-reliance on a small number of MNCs creates vulnerability.
+FDI and innovation. Globalisation brings MNCs to Ireland, creating jobs and improving technology and skills. E.g. Google, Meta, Pfizer in Ireland. However, over-reliance on a small number of MNCs creates vulnerability.
− Political Risks
Political risk. Government policy changes in a trading partner can suddenly restrict market access — e.g. US tariffs on Irish pharmaceuticals. This disruption is largely outside the control of individual Irish businesses.
+− Financial Risks
Financial risk. Selling in non-euro currencies exposes Irish businesses to exchange rate changes. A drop in the value of a foreign currency reduces euro revenue even if the local price stays the same. E.g. a fall in sterling cuts euro income from UK sales.
+− Cultural Barriers
Cultural barriers. Consumer tastes, language and business norms differ between countries. Products and marketing that work in Ireland may not suit other cultures. E.g. food brands may need to reformulate or rebrand for different markets.
+− Environmental and Social Impact
Environmental: international trade increases carbon emissions from freight. Resource extraction in supplier countries causes environmental damage. These costs may eventually impose regulatory costs on Irish exporters.
Social: globalisation can cause job losses when companies relocate to lower-cost countries, and puts pressure on housing and infrastructure in areas of rapid FDI growth.
+Social: globalisation can cause job losses when companies relocate to lower-cost countries, and puts pressure on housing and infrastructure in areas of rapid FDI growth.
5.8
Explain how globalisation increases interdependence and evaluate the consequences for businesses and consumers
Explain / Evaluate
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EXPLAIN / EVALUATEDefine interdependence, explain how globalisation creates it, then evaluate the consequences for both businesses and consumers. Include both positive and negative consequences.
What is Interdependence?
Interdependence means countries, businesses and consumers rely on each other through trade, supply chains, finance and technology. A disruption in one part of the global economy ripples through to others. Ireland, as a small open economy, is particularly exposed.
+Consequences for Businesses
Opportunity: access to global supply chains, cheaper inputs and vastly larger customer bases than the domestic market. E.g. Irish tech firms sell software to clients worldwide from a single Irish base.
Risk: supply chain disruptions can halt production (e.g. COVID-19). Recession abroad quickly reduces Irish export demand. Irish businesses have little control over these global events.
+Risk: supply chain disruptions can halt production (e.g. COVID-19). Recession abroad quickly reduces Irish export demand. Irish businesses have little control over these global events.
Consequences for Consumers
Benefit: wider product choice and lower prices from global competition. Competition also pushes businesses to improve quality and innovate.
Risk 1 — Job losses: when companies relocate to lower-cost countries, Irish workers lose jobs and have less income to spend.
Risk 2 — Global shocks: events like pandemics or conflicts disrupt supply chains, causing higher prices or shortages in Irish shops.
Risk 3 — Environmental impact: global trade increases carbon emissions and long-distance transport. Consumers may face future costs from environmental taxes or regulations.
Risk 4 — Loss of local choice: cheap imports make it harder for small Irish producers to compete. Consumers may find fewer Irish-made products available as local businesses close.
+Risk 1 — Job losses: when companies relocate to lower-cost countries, Irish workers lose jobs and have less income to spend.
Risk 2 — Global shocks: events like pandemics or conflicts disrupt supply chains, causing higher prices or shortages in Irish shops.
Risk 3 — Environmental impact: global trade increases carbon emissions and long-distance transport. Consumers may face future costs from environmental taxes or regulations.
Risk 4 — Loss of local choice: cheap imports make it harder for small Irish producers to compete. Consumers may find fewer Irish-made products available as local businesses close.
5.9
Evaluate the role of technology in globalisation
Evaluate
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EVALUATEExamine evidence and make a judgement. The textbook covers three headings: trade, work practices, and how the business operates. Include both benefits and limitations under each heading.
Technology and Trade
Benefit: e-commerce allows Irish businesses to sell globally without a physical presence in each market. E.g. Irish craft producers sell to the US via Etsy or Shopify.
Risk: cyberattacks or technical failures can disrupt trade. Large platforms favour bigger global players, making it harder for smaller Irish businesses to compete for visibility.
+Risk: cyberattacks or technical failures can disrupt trade. Large platforms favour bigger global players, making it harder for smaller Irish businesses to compete for visibility.
Technology and Work Practices
Benefit: remote working tools allow Irish employees to collaborate across time zones without relocating. Reduces travel costs and opens up global job opportunities for Irish workers.
Risk: remote working can lead to staff isolation and weaker team culture. Reliable broadband is also not equally available across all of Ireland.
+Risk: remote working can lead to staff isolation and weaker team culture. Reliable broadband is also not equally available across all of Ireland.
Technology and Business Operations
Benefit: automation and analytics allow businesses to coordinate across multiple countries in real time, reducing costs and improving efficiency. E.g. logistics firms track deliveries across 12+ countries simultaneously.
Risk: any system outage or cyberattack can halt operations entirely. The cost of implementing advanced systems is significant for smaller Irish businesses.
+Risk: any system outage or cyberattack can halt operations entirely. The cost of implementing advanced systems is significant for smaller Irish businesses.
5.10
Explain what is meant by Foreign Direct Investment and investigate how the Irish government promotes FDI
Explain / Investigate
▼
EXPLAIN / INVESTIGATEDefine FDI clearly and give an Irish example. Then explain what makes Ireland attractive to foreign investors and how IDA Ireland actively promotes and supports FDI.
What is FDI?
Foreign Direct Investment is when a foreign company sets up business operations in another country. In Ireland, this means multinational companies choosing to locate here. E.g. Google (Dublin), Apple (Cork), Pfizer (Cork/Dublin), Meta (Dublin), Dexcom (Cork).
+Why Ireland Attracts FDI
1. Low corporation tax: 12.5% standard rate (15% for largest MNCs) — one of the lowest in the EU. Reduces tax on European profits significantly.
2. EU market access: English-speaking EU member — ideal gateway for US companies reaching 450m+ consumers.
3. Educated workforce: young, skilled, English-speaking talent pool, especially in tech, science and finance.
4. Pro-enterprise environment: IDA Ireland provides grants and connects MNCs to Irish industry and research.
+2. EU market access: English-speaking EU member — ideal gateway for US companies reaching 450m+ consumers.
3. Educated workforce: young, skilled, English-speaking talent pool, especially in tech, science and finance.
4. Pro-enterprise environment: IDA Ireland provides grants and connects MNCs to Irish industry and research.
IDA Ireland — How it Promotes FDI
IDA Ireland is the government agency that attracts and develops FDI in Ireland.
Grants: employment grants (to create jobs), R&D grants (to fund innovation), capital grants (for equipment and facilities).
Support: connects foreign investors to local Irish industry, universities and research centres. Provides data on Irish business sectors to help investors make decisions.
+Grants: employment grants (to create jobs), R&D grants (to fund innovation), capital grants (for equipment and facilities).
Support: connects foreign investors to local Irish industry, universities and research centres. Provides data on Irish business sectors to help investors make decisions.
5.11
Outline the contribution of Foreign Direct Investment to the Irish economy
Outline
▼
OUTLINEGive the main points. The textbook covers five areas: employment, revenue, research, infrastructure and innovation — each with opportunities and challenges.
Employment
Opportunity: over 300,000 people work in MNCs in Ireland. More than half of new FDI investment goes outside Dublin, supporting regional employment.
Challenge: vulnerable to global tech layoffs and MNC relocation. A small number of companies account for a disproportionately large share of FDI-related employment.
+Challenge: vulnerable to global tech layoffs and MNC relocation. A small number of companies account for a disproportionately large share of FDI-related employment.
Tax Revenue
Opportunity: MNCs account for over 80% of Ireland’s corporation tax revenue, funding public services and infrastructure.
Challenge: over-reliance on a small number of large MNCs. If they restructure or leave, the impact on public finances would be severe.
+Challenge: over-reliance on a small number of large MNCs. If they restructure or leave, the impact on public finances would be severe.
Research and Innovation
Opportunity: IDA grants and tax credits support R&D, making Ireland an R&D hub. MNCs bring new technology and practices that spread to Irish businesses.
Challenge: if MNCs relocate their R&D, Ireland loses that capacity. Skills shortages in specialist areas can also limit growth.
+Challenge: if MNCs relocate their R&D, Ireland loses that capacity. Skills shortages in specialist areas can also limit growth.
Infrastructure
Opportunity: enterprise zones and tax incentives support rural development. Government investment in roads, broadband and energy follows FDI demand.
Challenge: data centres consume large amounts of electricity, straining the energy grid. Demand from MNC workers drives up housing costs in Dublin and Cork.
+Challenge: data centres consume large amounts of electricity, straining the energy grid. Demand from MNC workers drives up housing costs in Dublin and Cork.
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📌 5.1–5.2 Trading Blocs
Trading
Blocs
Blocs
Definition
Group of countries that reduce/remove trade barriers between them
Types: free trade area | customs union | common market (single market)
Why They Matter for Ireland
Access to 450m+ consumers in the EU — tariff-free
Lower costs — source inputs from EU without tariffs
Free movement of labour and capital
Common standards — sell across all 27 EU states without adapting product
Key Blocs for Ireland
EU — 37% of Irish exports (2023); member state; most important
USMCA — not a member but US = 30% of Irish exports; pharma/IT/finance
Mercosur — €1bn+ imports from South America; animal feed etc.
📌 5.3 EU Membership
EU
Impact
Impact
Economy
+ Economic growth via single market — free movement of goods, services, capital, people
+ EU funding: CAP (agriculture), ERDF (regional development), infrastructure
+ Attracts FDI from US MNCs wanting an English-speaking EU base
− Loss of sovereignty — ECB sets interest rates; EU law takes precedence
Business
+ Tariff-free access to 450m+ consumers
+ Labour mobility: recruit from 27 countries to fill skills gaps
+ Euro: removes exchange rate risk; easier to compare supplier prices
− More regulation; increased competition from EU imports (e.g. Aldi, Lidl)
Consumer
+ More choice and lower prices from EU-wide competition
+ Stronger rights: GDPR, return policies, air passenger rights, food labelling
+ Freedom to travel, work and study across 27 EU countries
− Competition from imports can hurt Irish domestic producers
📌 5.4–5.5 Trading Internationally
Trading
Globally
Globally
Factors to Consider
Taxes & tariffs — import taxes make Irish goods more expensive abroad
Increased costs — transport, logistics, insurance, market entry
Exchange rates — affect revenue in euros from foreign sales
Regulation — different laws on products, labelling, data in each country
Competition — established local and international rivals in each market
Language & culture — preferences, habits and communication differ
Why Irish Businesses Trade Globally
Small open economy — domestic market too small for major growth
Total exports >€200bn/year
+ Larger markets, more revenue, economies of scale, global resources
− Currency risk, logistics costs, cultural barriers, regulation complexity
📌 5.6 Balance of Trade & Payments
Trade
Figures
Figures
Balance of Trade
Visible exports − visible imports (goods only)
Surplus if exports > imports | Deficit if imports > exports
Invisible exports do NOT affect balance of trade
Balance of Payments
(Visible + Invisible exports) − (Visible + Invisible imports)
Includes goods AND services (e.g. tourism, financial services, software)
Surplus if total exports > total imports | Deficit if total imports > total exports
Key Rules
Increase in visible exports → improves both
Increase in invisible exports → improves balance of payments only
Increase in any import → worsens the relevant measure
📌 5.7–5.9 Globalisation
Globalisation
+ Positive Impacts
Larger market access for Irish businesses
FDI and innovation — MNCs bring jobs, technology, expertise
More choice and lower prices for consumers
− Risks
Political risk: tariff changes, policy shifts, instability in trading partners
Financial risk: exchange rate volatility; market instability abroad
Cultural barriers: language, tastes, business norms differ by country
Environmental: increased carbon from international transport and supply chains
Interdependence
Countries rely on each other — disruption in one economy spreads to others
+ More opportunity − more vulnerability to global shocks (e.g. COVID-19)
Technology Role
Trade: e-commerce & logistics expand global reach; risk of cyberattacks
Work: remote working across time zones; isolation risk
Operations: automation & data analytics improve efficiency; system outage risk
📌 5.10–5.11 FDI
FDI
What is FDI?
When a foreign company invests in and sets up operations in Ireland
E.g. Google, Apple, Pfizer, Meta, Dexcom all have major Irish operations
Why Ireland Attracts FDI
12.5% corporation tax (15% for very large MNCs) — one of lowest in EU
English-speaking gateway to EU market (450m+ consumers)
Educated, young workforce — especially tech, science, finance
IDA Ireland: grants, R&D supports, data, networking
Contribution to Ireland
Employment: 300,000+ in MNCs; 50%+ investment outside Dublin
Revenue: MNCs = 80%+ of corporation tax; risk of over-reliance
Research: Ireland as R&D hub through IDA grants and tax credits
Infrastructure: rural enterprise zones; but pressure on housing/energy
Innovation: new tech and practices spread to Irish economy
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5.1Explain what is meant by the term trading bloc.HL Paper 2 · Q4(b)(i)▼
ExplainGive reasons for or causes of something.
Possible solutions could include
A trading bloc is a group of countries that allow free trade between members by reducing or removing trade barriers (such as tariffs).
This makes it easier and cheaper for member countries to buy and sell goods and services with each other.
This makes it easier and cheaper for member countries to buy and sell goods and services with each other.
5.1Explain what is meant by the term trading bloc.Activity Book · OL Q1(i)▼
ExplainGive reasons for or causes of something.
Possible solutions could include
A trading bloc is a group of countries that agree to reduce or remove trade barriers between them.
This makes it easier and cheaper for member countries to buy and sell goods and services with each other.
This makes it easier and cheaper for member countries to buy and sell goods and services with each other.
5.1Outline two reasons why trading blocs are important for businesses in the Irish economy.Activity Book · HL Q1(ii)▼
OutlineDevelop in a limited manner.
Possible solutions could include
1. Larger market access
Irish firms can trade freely with other bloc members without tariffs or customs checks. This boosts sales and helps businesses grow beyond the limited domestic market.
2. Spin-off opportunities
When multinationals set up in Ireland because of trading bloc access, they often rely on local Irish firms for goods and services. This creates new contracts and growth opportunities for Irish SMEs.
3. Lower input costs
Businesses can source raw materials and components tariff-free from other EU member states. This reduces production costs and improves profit margins, helping Irish firms compete on price.
Irish firms can trade freely with other bloc members without tariffs or customs checks. This boosts sales and helps businesses grow beyond the limited domestic market.
2. Spin-off opportunities
When multinationals set up in Ireland because of trading bloc access, they often rely on local Irish firms for goods and services. This creates new contracts and growth opportunities for Irish SMEs.
3. Lower input costs
Businesses can source raw materials and components tariff-free from other EU member states. This reduces production costs and improves profit margins, helping Irish firms compete on price.
5.2Identify one trading bloc, apart from the EU and Mercosur, that is relevant to Irish businesses.HL Paper 2 · Q4(b)(ii)▼
IdentifyRecognise and name.
Possible solutions could include
USMCA — United States–Mexico–Canada Agreement.
Mercosur — South American customs union of Brazil, Argentina, Uruguay and Paraguay.
Mercosur — South American customs union of Brazil, Argentina, Uruguay and Paraguay.
5.3Describe two benefits of EU membership to the Irish economy.OL Paper 1 · Q3(g)▼
DescribeGive a detailed account of the main points. Use: State the point. Explain it. Give an example.
Note: Describe requires State / Explain / Example. Each tier shown clearly.
Possible solutions could include
1. Access to the EU Single Market
State: EU membership gives Ireland access to the world's largest single market.
Explain: Irish businesses can trade freely with over 450 million consumers in other member states without tariffs or customs checks. As a result, Irish exports are more competitive and this boosts national income.
Example: Ireland's dairy industry can sell products across Europe at lower cost, supporting farm incomes and the agri-food sector.
2. EU funding and regional development
State: Ireland receives significant financial support through EU programmes.
Explain: Schemes such as CAP (Common Agricultural Policy) and ERDF provide investment in agriculture, infrastructure and innovation, strengthening economic growth and creating jobs.
Example: EU funding supports Irish farmers and rural development, benefiting the wider economy.
3. Attraction of foreign direct investment
State: EU membership helps attract multinational companies to Ireland.
Explain: US firms use Ireland as an English-speaking EU base, creating jobs and generating significant tax revenue for the Irish economy.
Example: Google, Apple and Pfizer all located their European operations in Ireland because of EU membership.
State: EU membership gives Ireland access to the world's largest single market.
Explain: Irish businesses can trade freely with over 450 million consumers in other member states without tariffs or customs checks. As a result, Irish exports are more competitive and this boosts national income.
Example: Ireland's dairy industry can sell products across Europe at lower cost, supporting farm incomes and the agri-food sector.
2. EU funding and regional development
State: Ireland receives significant financial support through EU programmes.
Explain: Schemes such as CAP (Common Agricultural Policy) and ERDF provide investment in agriculture, infrastructure and innovation, strengthening economic growth and creating jobs.
Example: EU funding supports Irish farmers and rural development, benefiting the wider economy.
3. Attraction of foreign direct investment
State: EU membership helps attract multinational companies to Ireland.
Explain: US firms use Ireland as an English-speaking EU base, creating jobs and generating significant tax revenue for the Irish economy.
Example: Google, Apple and Pfizer all located their European operations in Ireland because of EU membership.
5.3Outline two benefits of Ireland's EU membership for Irish businesses.OL Paper 2 · Q3(e)▼
OutlineDevelop in a limited manner.
Possible solutions could include
1. Increased market access without tariffs
Membership of the Single Market allows Irish firms to sell goods and services to over 450 million consumers without tariffs or customs checks, making exports more competitive.
2. Reduced costs of inputs
EU membership allows Irish businesses to import raw materials and components tariff-free from other member states, lowering production costs and improving profitability.
3. Labour mobility
The free movement of workers across the EU means Irish businesses can recruit skilled staff from 27 member states, helping fill gaps in healthcare, construction and technology.
Membership of the Single Market allows Irish firms to sell goods and services to over 450 million consumers without tariffs or customs checks, making exports more competitive.
2. Reduced costs of inputs
EU membership allows Irish businesses to import raw materials and components tariff-free from other member states, lowering production costs and improving profitability.
3. Labour mobility
The free movement of workers across the EU means Irish businesses can recruit skilled staff from 27 member states, helping fill gaps in healthcare, construction and technology.
5.4Outline three factors that Grá Chocolates should consider before expanding into the international market.HL Paper 1 · Q2(c)▼
OutlineDevelop in a limited manner.
Note: Outline = state the factor, explain briefly how it affects the business. No extended example needed.
Possible solutions could include
Exchange rates
Changes in the value of the euro against the US dollar will affect Grá Chocolates' pricing and profits. A weaker euro makes exports cheaper for US consumers, while a stronger euro makes them more expensive.
Competition
Grá Chocolates must consider the level of competition in the US confectionery market. Established local and global brands may already dominate shelf space, so the business will need to decide how to stand out.
Language and culture
Consumer tastes, marketing styles and packaging expectations in the US may differ from Ireland. Grá Chocolates will need to adapt to these cultural differences to connect with customers effectively.
Legal and regulatory requirements
The business will need to meet US food safety and labelling rules. Different standards apply compared to Ireland, and failure to comply could delay sales or damage the brand's reputation.
Changes in the value of the euro against the US dollar will affect Grá Chocolates' pricing and profits. A weaker euro makes exports cheaper for US consumers, while a stronger euro makes them more expensive.
Competition
Grá Chocolates must consider the level of competition in the US confectionery market. Established local and global brands may already dominate shelf space, so the business will need to decide how to stand out.
Language and culture
Consumer tastes, marketing styles and packaging expectations in the US may differ from Ireland. Grá Chocolates will need to adapt to these cultural differences to connect with customers effectively.
Legal and regulatory requirements
The business will need to meet US food safety and labelling rules. Different standards apply compared to Ireland, and failure to comply could delay sales or damage the brand's reputation.
5.4Outline why an Irish clothing business should consider the following factors before expanding internationally: exchange rates, competition, language and culture.Activity Book · OL Q4▼
OutlineDevelop in a limited manner.
Possible solutions could include
Exchange rates
Changes in currency values can affect pricing and profits when trading in non-euro countries. If the euro weakens, Irish products become cheaper abroad and exports may increase.
Competition
The business must check the strength of local and global competitors in the new market and decide how to position its products against them.
Language and culture
Differences in language and customs can affect advertising, customer service and branding. This can lead to higher costs to adjust the marketing mix to suit local needs.
Increased costs
Transporting goods internationally is more expensive than selling in the domestic market. Costs for shipping, insurance and logistics must be built into the export price or they will cut into profit margins.
Changes in currency values can affect pricing and profits when trading in non-euro countries. If the euro weakens, Irish products become cheaper abroad and exports may increase.
Competition
The business must check the strength of local and global competitors in the new market and decide how to position its products against them.
Language and culture
Differences in language and customs can affect advertising, customer service and branding. This can lead to higher costs to adjust the marketing mix to suit local needs.
Increased costs
Transporting goods internationally is more expensive than selling in the domestic market. Costs for shipping, insurance and logistics must be built into the export price or they will cut into profit margins.
5.6Distinguish between the terms balance of payments and balance of trade in terms of international trade.Activity Book · HL Q6(i)▼
DistinguishRecognise or point out the difference between two or more items.
Possible solutions could include
Balance of Trade: The difference between visible exports (goods) and visible imports. It is a surplus if exports > imports, and a deficit if imports > exports.
Balance of Payments: The difference between total exports (visible plus invisible) and total imports (visible plus invisible). It is a surplus if total exports > total imports.
Key difference: The balance of trade counts goods only. The balance of payments counts goods AND services (invisible exports/imports).
Balance of Payments: The difference between total exports (visible plus invisible) and total imports (visible plus invisible). It is a surplus if total exports > total imports.
Key difference: The balance of trade counts goods only. The balance of payments counts goods AND services (invisible exports/imports).
5.6Based on the figures below, calculate the balance of payments and balance of trade for Ireland. State clearly whether it is a surplus or deficit. Show workings.
Visible Exports €120bn | Visible Imports €110bn | Invisible Exports €65bn | Invisible Imports €85bnActivity Book · HL Q6(ii)▼
Visible Exports €120bn | Visible Imports €110bn | Invisible Exports €65bn | Invisible Imports €85bnActivity Book · HL Q6(ii)▼
CalculateWork out a numerical answer.
Possible solutions could include
Balance of Trade
Formula: Visible Exports − Visible Imports
Workings: €120bn − €110bn = €10bn
Answer: €10bn balance of trade surplus
Balance of Payments
Formula: (Visible + Invisible Exports) − (Visible + Invisible Imports)
Workings: (€120bn + €65bn) − (€110bn + €85bn) = €185bn − €195bn = −€10bn
Answer: −€10bn balance of payments deficit
Formula: Visible Exports − Visible Imports
Workings: €120bn − €110bn = €10bn
Answer: €10bn balance of trade surplus
Balance of Payments
Formula: (Visible + Invisible Exports) − (Visible + Invisible Imports)
Workings: (€120bn + €65bn) − (€110bn + €85bn) = €185bn − €195bn = −€10bn
Answer: −€10bn balance of payments deficit
5.6Based on the figures below, calculate the balance of payments and balance of trade for Ireland. State clearly whether they are a surplus or deficit. Show workings.
Visible Exports €90bn | Visible Imports €80bn | Invisible Exports €55bn | Invisible Imports €82bnActivity Book · OL Q6(ii)▼
Visible Exports €90bn | Visible Imports €80bn | Invisible Exports €55bn | Invisible Imports €82bnActivity Book · OL Q6(ii)▼
CalculateWork out a numerical answer.
Possible solutions could include
Balance of Trade
Formula: Visible Exports − Visible Imports
Workings: €90bn − €80bn = €10bn
Answer: €10bn balance of trade surplus
Balance of Payments
Formula: (Visible + Invisible Exports) − (Visible + Invisible Imports)
Workings: (€90bn + €55bn) − (€80bn + €82bn) = €145bn − €162bn = −€17bn
Answer: −€17bn balance of payments deficit
Formula: Visible Exports − Visible Imports
Workings: €90bn − €80bn = €10bn
Answer: €10bn balance of trade surplus
Balance of Payments
Formula: (Visible + Invisible Exports) − (Visible + Invisible Imports)
Workings: (€90bn + €55bn) − (€80bn + €82bn) = €145bn − €162bn = −€17bn
Answer: −€17bn balance of payments deficit
5.8Outline three challenges that consumers in Ireland face as a result of the country's reliance on globalisation.HL Paper 2 · Q2(d)▼
OutlineDevelop in a limited manner.
Possible solutions could include
1. Job losses from outsourcing
Globalisation can lead to Irish firms moving production abroad to lower-cost countries. This can cause job losses in Ireland, leaving consumers with less income to spend on goods and services.
2. Exposure to global shocks
Events such as pandemics or conflicts can disrupt global supply chains. For consumers in Ireland this means higher prices in shops or delays in getting the goods they want.
3. Loss of local choice
Globalisation brings more low-cost imports into Ireland, which can make it harder for small local producers to compete. Consumers may find fewer Irish-made options available as local businesses close or scale back.
Environmental impact
Global trade increases long-distance transport and carbon emissions. Consumers in Ireland are affected through higher concern about climate change and possible future costs linked to environmental taxes or regulations.
Globalisation can lead to Irish firms moving production abroad to lower-cost countries. This can cause job losses in Ireland, leaving consumers with less income to spend on goods and services.
2. Exposure to global shocks
Events such as pandemics or conflicts can disrupt global supply chains. For consumers in Ireland this means higher prices in shops or delays in getting the goods they want.
3. Loss of local choice
Globalisation brings more low-cost imports into Ireland, which can make it harder for small local producers to compete. Consumers may find fewer Irish-made options available as local businesses close or scale back.
Environmental impact
Global trade increases long-distance transport and carbon emissions. Consumers in Ireland are affected through higher concern about climate change and possible future costs linked to environmental taxes or regulations.
5.10Outline two reasons why a business such as Dexcom would locate in Ireland.HL Paper 1 · Q4(a)▼
OutlineDevelop in a limited manner.
Note: Skilled workforce is also a valid third point if asked for three reasons.
Possible solutions could include
1. Low corporation tax rate
Ireland's corporation tax rate of 12.5% (15% for large multinationals) is one of the lowest in the EU. This allows global firms to retain more of their profits compared to locating in most other countries.
2. Access to the EU Single Market
By locating in Ireland, Dexcom gains access to over 450 million EU consumers, allowing it to sell products freely across the bloc without tariffs or customs checks.
3. Skilled workforce
Ireland has a highly educated, English-speaking workforce, particularly in science, technology and engineering. This gives Dexcom the talent it needs to operate in the medical device sector.
Ireland's corporation tax rate of 12.5% (15% for large multinationals) is one of the lowest in the EU. This allows global firms to retain more of their profits compared to locating in most other countries.
2. Access to the EU Single Market
By locating in Ireland, Dexcom gains access to over 450 million EU consumers, allowing it to sell products freely across the bloc without tariffs or customs checks.
3. Skilled workforce
Ireland has a highly educated, English-speaking workforce, particularly in science, technology and engineering. This gives Dexcom the talent it needs to operate in the medical device sector.
5.11Outline two opportunities and two challenges of Foreign Direct Investment (FDI) for Ireland.HL Paper 1 · Q4(b)▼
OutlineDevelop in a limited manner.
Possible solutions could include
Opportunity 1 — Job creation
FDI brings direct employment in multinationals and indirect jobs through local suppliers and services. This reduces unemployment and increases income tax revenue for the Irish economy.
Opportunity 2 — Technology and skills transfer
Multinationals bring advanced technology, processes and training to Ireland. This improves productivity and helps Irish workers gain skills that strengthen future Irish-owned businesses.
Opportunity 3 — Regional development
When foreign firms set up plants outside Dublin, they create jobs and investment in smaller towns and regions. This supports balanced economic growth across Ireland and reduces pressure on the capital.
Challenge 1 — Profit repatriation
Many multinationals send a large share of their profits back to their home countries, meaning less money stays in Ireland to be reinvested in the domestic economy.
Challenge 2 — Over-dependence on MNCs
Ireland relies heavily on a small number of multinationals for exports, tax revenue and jobs. If one major employer downsizes or relocates, it could cause significant job losses and reduce government income.
Challenge 3 — Pressure on housing and infrastructure
The growth of multinational employment has increased demand for housing, transport and schools. This puts pressure on public services and raises the cost of living for people living in affected areas.
FDI brings direct employment in multinationals and indirect jobs through local suppliers and services. This reduces unemployment and increases income tax revenue for the Irish economy.
Opportunity 2 — Technology and skills transfer
Multinationals bring advanced technology, processes and training to Ireland. This improves productivity and helps Irish workers gain skills that strengthen future Irish-owned businesses.
Opportunity 3 — Regional development
When foreign firms set up plants outside Dublin, they create jobs and investment in smaller towns and regions. This supports balanced economic growth across Ireland and reduces pressure on the capital.
Challenge 1 — Profit repatriation
Many multinationals send a large share of their profits back to their home countries, meaning less money stays in Ireland to be reinvested in the domestic economy.
Challenge 2 — Over-dependence on MNCs
Ireland relies heavily on a small number of multinationals for exports, tax revenue and jobs. If one major employer downsizes or relocates, it could cause significant job losses and reduce government income.
Challenge 3 — Pressure on housing and infrastructure
The growth of multinational employment has increased demand for housing, transport and schools. This puts pressure on public services and raises the cost of living for people living in affected areas.
