4.1.3 Pattern of trade

Question 1

what is a geographical pattern of trade?

Answer 1

people with whom countries and businesses trade (usually in close proximity)

Question 2

what is the commodity pattern of trade?

Answer 2

the type of products that are traded internationally
- can see the extent that a country has a dependence on primary v manufactured v service exports

Question 3

what factors affect comparative advantage?

Answer 3

dynamic concept it changes over time due to;
- natural resources
- unit wage costs
- infrastructure
- non-price factors eg product design
- import controls eg tariffs
- exchange rates

Question 4

whats the impact of emerging economies on trade patterns?

Answer 4

• rising income ➡️ purchase more goods from elsewhere in the world
• attract MNCs and their own large firms operate elsewhere in the world
• sell more medium to high value products
• currency volatility in emerging markets can have a large impact on commodity prices and raw material prices in other countries
• rising tension w developed countries ➡️ trade wars/protectionist measures

Question 5

whats the impact of trade blocks on trade patterns?

Answer 5

➡️ more intra-regional trade (within the trade bloc itself) and less inter-regional trade (trade between
region/blocs) ➡️ countries do not always gain the benefits from specialising according to their comparative advantage (may be trade creation at the expense of trade diversion)

Question 6

impact of exchange rate on trade?

Answer 6

• a strong currency makes exports look expensive and imports cheaper
• a weak currency makes exports look cheap and imports more expensive
  ❗️ consider relative exchange rates

Question 7

what is a preferential trade area?

Answer 7

• reduced protectionism on a PREFERED/certain goods

Question 8

what is a free trade area?

Answer 8

there is completely free trade between the areas involved but each country can set their own trade agreements outside of this

Question 9

what is a customs union?

Answer 9

there is completely free trade between the countries involved and they all agree to impose the same trade regulations on other countries