2.3. What Do We Trade?

Question 1

What do we trade?

Answer 1

~70% of trade today is manufactured products, such as vehicles, computers and clothing.
~15% of trade is mineral products (ores, coal and oil).
~10% of trade is agriculture.

Over time, both richer and poorer countries have increased manufactured exports and decreased agricultural exports.

In 1960, about 58% of exports from low- middle-income countries were agricultural products and only 12% were manufactured products.

In 2001, about 65% of exports from low- and middle-income countries were manufactured products and only 10% were agricultural products.

Question 2

Service offshoring

Answer 2

Service offshoring (service outsourcing) is where a service, previously done within a country, is shifted to a foreign location.

This occurs for services that occur electronically (i.e. an accountant for a supermarket chain).

A common example is call centre workers, which are moved to low-wage countries, such as India, to save money.

Only tradable jobs can be offshored, so the supermarket workers stacking the shelves cannot be sent overseas.

Question 3

Do old rules still apply?

Answer 3

Human resources and human-created resources are more important than natural resources.

Political battles over trade typically involve workers who face competition.

The fundamental principles of the global economy and international trade still apply.