International trade

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World trade
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International trade is the exchange of capital, goods, and services across international borders or territories.[1]

In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has existed throughout history (for example Uttarapatha, Silk Road, Amber Road, scramble for Africa, Atlantic slave trade, salt roads), its economic, social, and political importance has been on the rise in recent centuries.

Carrying out trade at an international level is a complex process when compared to domestic trade. When trade takes place between two or more nations factors like currency, government policies, economy, judicial system, laws, and markets influence trade.

To smoothen and justify the process of trade between countries of different economic standing, some international economic organisations were formed, such as the World Trade Organization. These organisations work towards the facilitation and growth of international trade. Statistical services of intergovernmental and supranational organisations and national statistical agencies publish official statistics on international trade.

Characteristics of global trade[edit]

A product that is transferred or sold from a party in one country to a party in another country is an export from the originating country, and an import to the country receiving that product. Imports and exports are accounted for in a country's current account in the balance of payments.[2]

Trading globally gives consumers and countries the opportunity to be exposed to new markets and products. Almost every kind of product can be found in the international market: food, clothes, spare parts, oil, jewellery, wine, stocks, currencies, and water. Services are also traded: tourism, banking, consulting, and transportation

Ancient Silk Road trade routes across Eurasia

Advanced technology (including transportation), globalisation, industrialisation, outsourcing and multinational corporations have major impact on the international trade system.

Increasing international trade is crucial to the continuance of globalisation. Nations would be limited to the goods and services produced within their own borders without international trade.

Differences from domestic trade[edit]

International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not.

However, in practical terms, carrying out trade at an international level is typically a more complex process than domestic trade. The main difference is that international trade is typically more costly than domestic trade. This is due to the fact that a border typically imposes additional costs such as tariffs, time costs due to border delays, and costs associated with country differences such as language, the legal system, or culture (non-tariff barriers).

Another difference between domestic and international trade is that factors of production such as capital and labor are often more mobile within a country than across countries. Thus, international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labour, or other factors of production. Trade in goods and services can serve as a substitute for trade in factors of production. Instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and thus embody it. An example of this is the import of labor-intensive goods by the United States from China. Instead of importing Chinese labor, the United States imports goods that were produced with Chinese labor. One report in 2010 suggested that international trade was increased when a country hosted a network of immigrants, but the trade effect was weakened when the immigrants became assimilated into their new country.[3]

History[edit]

Main article: Timeline of international trade

The history of international trade chronicles notable events that have affected trading among various economies.

Theories and models[edit]

Main article: International trade theory

There are several models which seek to explain the factors behind international trade, the welfare consequences of trade and the pattern of trade.

Most traded export products[edit]

Most traded export products.png

Largest countries by total international trade[edit]

Volume of world merchandise exports
Main articles: List of countries by exports and List of countries by imports

The following table is a list of the 21 largest trading nations according to the World Trade Organization.[4][failed verification]

Rank Country International trade of
goods (billions of USD)		 International trade of
services (billions of USD)		 Total international trade
of goods and services
(billions of USD)
– World 32,430 9,635 42,065
–  European Union[5] 3,821 1,604 5,425
1  United States 3,706 1,215 4,921
2  China 3,686 656 4,342
3  Germany 2,626 740 3,366
4  United Kingdom 1,066 571 1,637
5  Japan 1,250 350 1,600
6  France 1,074 470 1,544
7  Netherlands 1,073 339 1,412
8  Hong Kong 1,064 172 1,236
9  South Korea 902 201 1,103
10  Italy 866 200 1,066
11  Canada 807 177 984
12  Belgium 763 212 975
13  India 623 294 917
13  Singapore 613 304 917
15  Mexico 771 53 824
16  Spain 596 198 794
17   Switzerland 572 207 779
18  Taiwan 511 93 604
19  Russia 473 122 595
20  Ireland 248 338 586
21  United Arab Emirates 491 92 583

Top traded commodities by value (exports)[edit]

Volume of world merchandise exports
Rank Commodity Value in US$('000) Date of
information
1 Mineral fuels, oils, distillation products, etc. $2,183,079,941 2015
2 Electrical, electronic equipment $1,833,534,414 2015
3 Machinery, nuclear reactors, boilers, etc. $1,763,371,813 2015
4 Vehicles other than railway $1,076,830,856 2015
5 Plastics and articles thereof $470,226,676 2015
6 Optical, photo, technical, medical, etc. apparatus $465,101,524 2015
7 Pharmaceutical products $443,596,577 2015
8 Iron and steel $379,113,147 2015
9 Organic chemicals $377,462,088 2015
10 Pearls, precious stones, metals, coins, etc. $348,155,369 2015

Source: International Trade Centre[6]

Observances[edit]

President George W. Bush observed World Trade Week on May 18, 2001, and May 17, 2002.[7][8] On May 13, 2016, President Barack Obama proclaimed May 15 through May 21, 2016, World Trade Week, 2016.[9] On May 19, 2017, President Donald Trump proclaimed May 21 through May 27, 2017, World Trade Week, 2017.[10][11] World Trade Week is the third week of May. Every year the President declares that week to be World Trade Week.[12][13]

See also[edit]

Lists

Notes[edit]

  1. ^ "Trade – Define Trade at Dictionary.com". Dictionary.com.
  2. ^ Staff, Investopedia (2003-11-25). "Balance Of Payments (BOP)". Investopedia. Retrieved 2017-05-07.
  3. ^ Kusum Mundra (October 18, 2010). "Immigrant Networks and U.S. Bilateral Trade: The Role of Immigrant Income". papers.ssrn. SSRN 1693334. Mundra, Kusum, Immigrant Networks and U.S. Bilateral Trade: The Role of Immigrant Income. IZA Discussion Paper No. 5237. Available at SSRN: http://ssrn.com/abstract=1693334 ... this paper finds that the immigrant network effect on trade flows is weakened by the increasing level of immigrant assimilation.
  4. ^ Leading merchandise exporters and importers, 2016
  5. ^ excluding intra-EU trade
  6. ^ International Trade Centre (ITC). "Trade Map - Trade statistics for international business development".
  7. ^ Office of the Press Secretary (May 22, 2001). "World Trade Week, 2001" (PDF). Federal Register. Washington, D.C.: Federal Government of the United States. Archived from the original on May 22, 2001. Retrieved March 13, 2017.
  8. ^ Office of the Press Secretary (May 22, 2002). "World Trade Week, 2002" (PDF). Federal Register. Washington, D.C.: Federal Government of the United States. Archived from the original on May 22, 2002. Retrieved March 12, 2017.
  9. ^ "Presidential Proclamation -- World Trade Week, 2016". whitehouse.gov. Washington, D.C.: White House. May 13, 2016. Retrieved April 11, 2017.
  10. ^ Office of the Press Secretary (May 19, 2017). "President Donald J. Trump Proclaims May 21 through May 27, 2017, as World Trade Week". whitehouse.gov. Washington, D.C.: White House. Retrieved May 20, 2017.
  11. ^ "President Donald J. Trump Proclaims May 21 through May 27, 2017, as World Trade Week". World News Network. United States: World News Inc. May 20, 2017. Retrieved May 20, 2017.
  12. ^ "Import Export Data". Import Export data. Retrieved 2017-10-06.
  13. ^ "World Trade Week New York". World Trade Week New York. Retrieved 2017-10-06.

References[edit]

  • Jones, Ronald W. (1961). "Comparative Advantage and the Theory of Tariffs". The Review of Economic Studies. 28 (3): 161–175. doi:10.2307/2295945.
  • McKenzie, Lionel W. (1954). "Specialization and Efficiency in World Production". The Review of Economic Studies. 21 (3): 165–180. doi:10.2307/2295770.
  • Samuelson, Paul (2001). "A Ricardo-Sraffa Paradigm Comparing the Gains from Trade in Inputs and Finished Goods". Journal of Economic Literature. 39 (4): 1204–1214. doi:10.1257/jel.39.4.1204.

External links[edit]

Data[edit]

Official statistics[edit]

Data on the value of exports and imports and their quantities often broken down by detailed lists of products are available in statistical collections on international trade published by the statistical services of intergovernmental and supranational organisations and national statistical institutes. The definitions and methodological concepts applied for the various statistical collections on international trade often differ in terms of definition (e.g. special trade vs. general trade) and coverage (reporting thresholds, inclusion of trade in services, estimates for smuggled goods and cross-border provision of illegal services). Metadata providing information on definitions and methods are often published along with the data.

Other data sources[edit]

Other external links[edit]

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