International Trade: What Is It Really?

Relationship between Trade and World Output

The amount of Word Output in a year almost always influences the amount of International Trade. When a world economic output slows so does the level of International Trade; when an Output increases it generates a larger amount of International trade. Trade can often time’s slow during times of severe economic recession. The main cause for this is the fact that fewer consumers are absolutely certain about their financial futures. This leads to consumers purchasing fewer domestic and imported products. One other reason that Trade and World Out put are so closely related is because often times when a countries economy goes into a recession its monetary system looses value. This can lead to higher costing imports, which make domestic products a little more affordable. Even though Trade and World Output are so closely related, Trade continues to grow faster than World Output. The volume of world trade has increased significantly relative to world output; some of this increase can be accounted for by the fact that traded goods have become cheaper over time relative to those goods that are not traded.

The Broad Pattern of International Trade

Countries with higher income account for about sixty percent of the World’s merchandise trade, while trade between high income and low and middle income countries accounts for nearly thirty four percent of the world merchandise trade. However trade between low and middle income nations is about six percent of the World Trade. Knowing these numbers helps us to determine who exactly is trading with whom. This knowledge is important because it allows countries to know whether or not there is a significant level of trade occurring between the richest and poorest nations of the world. It also can help to determine if there is a significant level of trade activity within the poorer nations. There are Customs agencies in countries that aid the in the discernment of this type of information. There main purposes are to record the destination of exports, sources of imports as well as the physical quantities and values of goods that cross there borders. However this data can be misleading sometimes for example. Often time’s governments intentionally alter the reporting of trade when it is related to military equipment and other sensitive material such as that. However regardless of some of the discrepancies this is still one of the best ways to determine who is trading with whom.

What if Trade Did not Exist?

If the nations of the world were to suddenly stop trading with one another it could cause extreme chaos. For example if the USA were to stop trade with countries like Chile, and Brazil. We would be unable to get products like coffee, cocoa and tea, most tropical fruit and vegetables (both in fresh and processed form, e.g. fruit juices, concentrates and pulp), various spices and herbs, and dried fruit and nuts. Certain types of beers like German Lagers and ales would be unavailable if we were to stop all trades. We would have to live without a lot of our favorite foreign cars like the Ferrari or Jaguar. We would have to live without Italian leather, which would mean no more Italian leather shoes or handbags. We would also have to live without a lot of our electronics like certain brands of Televisions, DVD players, And so on are made in other countries like Japan and China. Basically if the United States were to stop trade with all other countries many of the luxuries we have grown accustom to would no longer be available.

Now if the United State were to stop trading with say Europe, many American made cars like the Ford mustang or the Cadillac would not be available in Europe. Certain grades of beef for instance Angus beef would also not be available in Europe as well. Many different type of cereals and cereal preparation equipment would not be available either. According to Intandem.com the largest export of the Unites States is Electrical machinery, apparatus and appliances these exports generate over seventy billion dollars a year for the Unite States. The United States would also have to do without certain types of silks and other textiles especially if were to stop all trade with China, This is because “China has been the main supplier of textiles and apparel to the United States since 1996” (falcon.jmu.edu, 2005 11-27)

Trade is a very important part of our world infrastructure without it. Many of the worlds largest and most economically sound countries would suffer. Many of the basic luxuries each Nation has taken for granted would no longer be available. Choices would be fewer in many countries and some instances there would be no choices at all. Trade is a very important part of our world economy without it many of the poorer Nations would have no real source of income. It could cause deeper recessions and ultimately nations full of poor and hungry people

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