4.1.3 Patterns Of Trade

Question 1

Factors influencing the pattern of trade between countries & changes in trade flow between countries

Answer 1

• comparative advantage
• emerging economies
• growth of trading blocs & bilateral trading agreements
• changes in relative exchange rates

Question 2

Factors influencing the pattern of trade between countries & changes in trade flow between countries (comparative advantage)

Answer 2

• Firms seek to profit maximise. Countries will increase production where there is a comparative advantage & outsource production where another country does it better
• there has been recent growth in exports of manufactured goods from developing countries to developed countries so developing countries. Developing countries (BRIC) have gained an adv in the production of manufactured goods

Question 3

Factors influencing the pattern of trade between countries (comparative advantage) example

Answer 3

• The deindustrialisation of countries e.g the UK = the manufacturing sector has declined = production of manufactured goods has shifted to other countries e.g China whilst UK focuses now more on services/finance = industrialisation of China and India
• however, since China’s population is now ageing, their wage competitiveness has fallen. There’s also a rise of the middle class who demand higher wages & consume more

Question 4

Factors influencing the pattern of trade between countries & changes in trade flow between countries (emerging economies)

Answer 4

• when countries grow, they are likely to need to import more g/s & will export more to pay for it
• emerging economies shift the trade pattern by taking up a larger proportion of a country’s imports & exports than previously

Question 5

Factors influencing the pattern of trade between countries & changes in trade flow between countries (emerging economies) example

Answer 5

• Emerging world economies like China, Brazil, India have obtained a much higher share of the global business = other countries are losing out as trading relationships change.
• International trade is more important for developing countries than developed one. It contributes towards 20% of LDC economies compared to 8% of the US economy.
• The collapse of communism has meant that more countries (BRICs) are participating in world trade

Question 6

Factors influencing the pattern of trade between countries & changes in trade flow between countries (growth of trading blocs & bilateral trading agreements)

Answer 6

• changing the amount of trade
• e.g joining the EU has meant that the UK traded a lot more with European countries than previously & less with countries outside the EU
• By December 2016, WTO had helped to facilitate more than 420 regional trading blocs & bilateral agreements.
• This results in trade creation & causes trade diversion

Question 7

Factors influencing the pattern of trade between countries & changes in trade flow between countries (changes in relative exchange rate)

Answer 7

• Exchange rate affects the relative prices of goods between countries. A change in price = change in consumption - change in pattern of trade
• if a country’s exchange rate appreciates then its sports are relatively more expensive & imports cheaper so g/s becomes heaped/more expensive in relation to the price of g/s in other countries

Question 8

Factors influencing the pattern of trade between countries & changes in trade flow between countries (changes in relative exchange rate) example

Answer 8

• the UK’s trade deficit with Europe is due tot the strength of the pound. China have kept their currency weak to increase trade surplus by making exports nine more expensive

Question 9

Key drivers changing patterns of trade

Answer 9

• After WW!
• in later 1940s, creations were made to support trade e.g International Monetary Fund, the general agreement on Tariffs and Trade

Question 10

Recent changes in the pattern of trade

Answer 10

• Washington Census- US last year, on some areas has gone into reverse. America, previously a champion of free trade & international cooperation, is now a critic
• China trade surplus, its dependence on exports, make it an advocate of trade. In the West, the standard of living more than ever dependent on abundant imports of g/s that can’t be produced at such prices at home