International Trade Current International Trade Patterns Term Paper

Pages: 3 (1002 words)  ·  Bibliography Sources: 3  ·  File: .docx  ·  Topic: Economics

International Trade

Current International Trade patterns and trends and the methods governments use to promote and restrict international trade

Explain the relation between trade and world output

According to Mark Dean and Maria Sebastia-Barriel of the Bank of England, between the years of 1980 and 2002, the sum total of all world trade tripled while world output only doubled. What was the reason for this discrepancy? The rise in trade relative to output was common to all countries and regions, "although the relative growth in trade and output varies greatly." (Dean & Sebastia-Barriel, p.1) In short, as a rule of thumb, the greater the amount of surplus goods or output a nation possesses, the more that nation has to trade. Thus increased world output and trade have a positive economic correlation. The reason for the disproportionate increase in trade in relation to world output, however, can only partially be explained in the increasing integration of the world economy and greater demand for goods.

Describe the broad pattern of international trade

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The trade to GDP ratio has increased in all major economies in the past although the scale of the increase has varied from region to region. In short, all nations are importing and exporting more goods, although this ratio varies from country to country and region to region. Nations have been able to increase their output of imported goods because it is cheaper to do so than it has in the past. For example, the costs of foreign and domestic transportation, communication, currency exchange and tariffs have fallen over the past twenty years, at a steady rate, despite occasional and unfortunate increases in such raw materials as the cost of fuel. (Dean & Sebastia-Barriel.p.2)

Term Paper on International Trade Current International Trade Patterns and Assignment

Also, total world productivity of goods and services and world income level of consumers has increased. This means that the supply of goods as well as the availability of funds to buy an array of goods has increased. Combined with the decreased costs of trade and a greater willingness to decrease tariffs, the logical result has been an increase in international trade. Amongst consumers, there is also less loyalty regarding the purchase of domestically produced products, as evidenced in the competition between Japan and America in the production of passenger cars. (Dean & Sebastia-Barriel, p.3) Trade is seen as a benefit to all: "the major industrial countries, while they sell products that compete with each other, are also each other's main export markets and main suppliers of useful imports. If anything, a successful European or Japanese economy helps the U.S. By providing us with larger markets." (Krugman, 2006)

If the nations of the world were to suddenly cut off all trade with one another, what products might you no longer be able to obtain in your country (U.S.)? Choose one other country and identify the products it would need to do without.

While the trade to GDP ratio has increased in all major economies over the past two decades, the scale of the increase has varied greatly.… [END OF PREVIEW] . . . READ MORE

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