Pattern of Trade

Question 1

Factors influencing the pattern of trade

Answer 1

1. Comparative advantage
2. Impact of emerging economies
3. Growth of trading blocs and bilateral trading agreements
4. Changes in relative exchange rates

Question 2

How does comparative advantage influence the pattern of trade?

Answer 2

Comparative advantage may change due to changes in labour skills and productivity, discovery of new natural resources and the adoption of new technology

Question 3

How does growth and trading blocs and bilateral trading agreements

Answer 3

Since WW2, trading blocs have grown in number and size

Question 4

How does changes in relative exchange rates affect the pattern of trade

Answer 4

e.g. country A’s currency depreciates against those of other countries = exports are more competitive = increase in demand for country A’s exports = decrease in demand for other country exports