4.1.3 - patterns of trade

Question 1

What are some factors influencing the pattern of trade?

Answer 1

-absolute and comparative advantages
-factor endowments - the quality and quantity of FOPs a country has
-trading blocs and trade agreements
-globalistion, trade liberalisation, protectionism and FDI flows
-changes in world income and growth rates
-exchange rate movements
-deindustrialisation and pace of economic development

Question 2

What are global patterns of trade like?

Answer 2

-trade flows with emerging economies have increased significantly
-trade within trading blocks has increased significantly eg. EU, but at the expense of traditional trading patterns such as between the UK and the Commonwealth
-UK biggest trading partners are EU, USA and China
-46% of UK’s exports go to the EU and 53% of UK imports come from the EU.

Question 3

How does comparative advantage influencing pattern of trade?

Answer 3

Comparative advantage encourages more trade between countries, specialisation means a higher amount of G/S is produced to be traded

Question 4

How does the impact of emerging economies influence patterns of trade?

Answer 4

As a country grows, it may need to import more goods/services, so developed economies may trade more with them

Question 5

How does the growth of trading blocs and agreements influence patterns of trade?

Answer 5

They increase trade between participating countries at the expense of other countries, changing the pattern of trade

Question 6

How does changes in relative exchange rates influence patterns of trade?

Answer 6

Exchange rates affect relative prices of g/s between countries, impacting patterns of trade