4.1.2. Pattern of Trade

Question 1

What does pattern of trade mean?

Answer 1

Refers to the regular flow of goods and services between countries, including what is traded, with whom, and how it happens. It shows the typical trading relationships and the types of products exchanged across borders.

Question 2

What are the factors influencing the pattern of trade?

Answer 2

1. Comparative advantage: Firms seek to profit maximise so where it makes sense to increase production firms do.
2. Impact of emerging economies: emerging economies have gained much higher share of global business which means other countries are losing out as trading relationships change
3. Growth of trading blocs and agreements: Results in trade creation (production to low-cost country) and trade diversion (moves to higher OC)
4. Exchange rates changes: If ER appreciates exports are more expensive and imports cheaper. Affect relative prices of goods between countries by are important factor for consumers