Chapter 13: International Trade Patterns

• Learning objectives in this chapter:– Describing the evolving patterns of

international commerce– Documenting emerging markets for global

exports– Examining global trade flows in six major

commodity groups

Backdrop

• Capitalism is in constant political and economic flux (****key interpenetration of these two themes*****)

• This chapter complements Chapter 12, with a largely empirical description of international trade

• International trade has gradually expanded in the post WW-II time period, and its growth has generally outpaced GDP expansion (Figure 13.3)

• Global economic growth has been uneven, and has reflected global recessions and expansions – see Figure 13.1, Figure 13.2, Tables 13.1, 13.2

World Economic Growth (% Change in GDP)

Table 13.1: Shifting Proportions of World Output

0

0.05

0.1

0.15

0.2

0.25

0.3

1980 1990 2000

Sh

are

of

wo

rld

ou

tpu

t

North America

Other WesternHemisphere

Middle East

Asia and Oceania

Western Europe

E. Europe andRussia

Africa

World Bank GDP % Change

Figure clearly shows rising rates of exports compared to overall productionlevels, especiallyin manufacturing

? What about services?

All the evidence we have points to the same trend

Emerging Markets• Table 13.2 & Figure 13.3 make the point that

globally the developing countries in Asia are the key points of expansion for export markets

Post 2000?

Impact of shift from natural resources to manufactured goods in this bar chart

Text discussion ofdifferences in trade policy

World Patterns of Trade: The United States

Note Change in Scale!

The Shifting Geography of U.S. Merchandise Trade

Scale must be off – high by 1,000 Figure 13.7 – U.S. – Canada Trade, Figure 13.5 updates this to 2000Table 13.4 indicates how concentrated U.S. trade is with a few nations

U.S. Services Trade

• Unlike merchandise, the U.S. has a big trade surplus in services

• Exports include quasi-services such as software

• Intellectual property & multimedia• Telecommunications• Travel – business & tourist• Financial• ??? Offshoring of services???

U.S. Trade in Key Commodities

The rise of Airbus,Bombardier (sp?)

Rise of imports fromJapan, Korea, Mexico,And Canada

U.S. Trade in Key Commodities

The shift from a net exporterto a net importer

Canadian Exports: The U.S. Dependence

Mismatch in size between U.S. and Canadian economies

Canadian Exports: From A Staples-based economy to diversified products

Mosttrade today iswithouttariffs:but lumber exports toU.S. arean exception

The EU

• The largest trading block of countries in the world – see Figure 13.10

• Exports are relatively large, given the population of Europe

• There are several explanations for this:– The relative wealth of European countries– The small sizes of the countries and their

relatively strong reliance on neighbors for markets (like states in the U.S. in many ways)

– Highly developed transportation system

Germany: Europe’s Largest Exporter

Solid trade surplus

Great Britain: More strongly tied to Europe than Germany, but this

figures excludes service exports

France: Strong European Ties

A more diversified mix of exports and imports than Germany or the U.K.

Italy: Much more Strongly Integrated with Europe than Germany, UK, and France

Is a gravity model type relationship evidence in %’s of exports/imports forGermany, Italy and France?

Western Europe’s Trade Balance

Latin America

• A divergent set of economies – some very stable, others unstable – some very poor and others with middle incomes

• Diverse resource endowments• Diverse historical backgrounds• Diverse political structures• The shift in development strategies from

import-substitution to export-led industrialization

Mexico’s Exports & Imports

Huge U.S. Dependence

Relatively largestaples exports

Ignores servicesexports / imports