Unit 7: Socioeconomic Impact Study on Industries and Businesses

7.3. Socioeconomic Impacts of Business on International

Trade

Let’s Connect
1. Which industry does your chosen business belong to?
Answers may vary. Companies may belong to the food, manufacturing, or services
industries.
2. Based on their history, did they expand internationally right away? Why?
Likely no, essentially because of the financial risks related to expansion. Newer
businesses may not be willing to take that risk so early on.
3. How did the firm’s expansion into international markets benefit the country?
It benefited the country by opening up more jobs to the community and increasing
the exposure of the Philippine economy to international markets.

Check Your Progress

Discuss the different barriers to trade imposed by governments to protect their industries
from the effects of international trade.
Answers may vary. The barriers to trade imposed by governments are set up to discourage
imports. They do this through various means (some involving taxes, others by making the
importation process much lengthier) but all centered around making the process more
difficult and increasing the overall cost of production of these imported goods, driving their
prices up.

Try This!
A. Fill in the Blanks. Fill in the blanks with the correct answer.

1. When imports exceed exports within a given period of time, the economy
experiences a trade deficit.
2. Tariffs are taxes imposed by governments on imported goods and services.
3. Net exports is the component of GDP that takes international trade into account.
4. Trade surpluses happen when the total value of exports is greater than imports.

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 Unit 7: Socioeconomic Impact Study on Industries and Businesses

5. While exports positively affect overall GDP, imports negatively affect it.

B. True or False. Write true if the statement is correct. Otherwise, write false.

False 1. Taxes are imposed on imported products to encourage their consumption.

False 2. Only tangible goods count towards exports and imports.

True 3. Surpluses and shortages affect the international market, similar to how
they affect domestic markets.

True 4. Businesses affect the international economy and foreign stakeholders.

False 5. The total value of exports and imports must always be equal.

True 6. Consumers are more likely to import final products, while businesses may
import raw materials as well.

True 7. Businesses may choose to expand their sales internationally in the pursuit
of higher profits and increased brand awareness.

False 8. World prices are unaffected by the exports and imports of small countries.

True 9. Tariffs are an example of a protectionist measure governments might

adopt to aid local industries.

False 10. Businesses only operate as sellers in the international market.

Challenge Yourself
1. Is the imposition of tariffs fair? Justify your answer by citing at least one advantage
and one disadvantage.
Answers may vary. Students may answer both fair or unfair. Possible advantages of
tariffs are to protect small domestic industries and provide an additional revenue
stream for the government. Possible disadvantages include higher prices for
consumers and low overall GDP.
2. What are two possible reasons why more businesses do not tap into the

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 Unit 7: Socioeconomic Impact Study on Industries and Businesses

international market?
Answers may vary. Smaller businesses might view the initial investment as too big
of a risk. Businesses may believe that their products are not competitive enough, and
others might just be unaware of the potential gains from international trade.

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