The development of the international trade patterns and the theories that try to describe these patterns are analysed in this essay. With special focus on major international trade streams in each period of time, the Classical Theory, the New Trade, and Contemporary International Trade Theories are described. In the pre-World War I period the data show us that the majority of the international trade were represented by dissimilar goods traded between developed and developing countries. More precisely, home developed countries like United Kingdom or Spain who owned enough capital for manufacturing, traded with developing countries (colonies) that were rich for natural resources but lacked the capital for manufacturing. The majority of the international …show more content…
Newly the bulk of international trade was between developed countries and the traded goods were only partly diversified and therefore we can speak about similar-similar trade or also intra-industry trade, for example similar cars of different brands. What happened was that firms that had been earlier very similar with barely any market power grown in size and also its market power if they had over performed other companies. In other words couple of successful companies was able to become oligopolies and set the price. Under the assumption of oligopolistic competition (or more restrictive assumption of monopolistic competition which expects that all the oligopolistic companies are the same) the New Trade Theory was introduced. This theory described well reasoning behind the international intra-industry trade which accounted majority of the international trade after the WW II until about 1990. The importance of geographical location, transportation costs and mobility of production factors were taken into account and described clustering effect as a self-forcing process due to economies of scale and positive externalities but sometimes also as an historical accident. Another important role played the formation of trade unions like for example the European Common market that removed many trade barriers and enhanced the international trade. Trade unions but also lower transportation costs which resulted mainly because of the technological progress provided access to new markets again and many multinational corporations took an advantage of it. There are couple of reasons why such companies were successful: enough capital for international expansion, extraordinary products, economies of scale, oligopolistic power… Trade between rich countries and similar-similar goods in this period was in line with the suggestions of the Gravity
During the postclassical period, the expansion of trade had different interpretations around the world. Varying societies all reacted to trade in different ways due to how they viewed the situation. It had caused conflict in few areas around the world and also created peace as well as harm. Some communities had pros and cons to trade, like everything else. Some reasons for the positive or negative feedback on trade was due to religion, and or the philosophical system. Religion and the philosophical system was both pros or cons for trade in different civilizations. Religion helped with the spread of different ideas and religions across a mass area. Yet it had a negative input because then people fought, thinking their religion was more
When one is to view the view the information pertaining to the trade existent between the United States and Europe, one finds an interesting change in the quantity of such interaction between the years of 1914 and 1916. This data demonstrates that trade with Great Britain rose from $594 million in the former year, to $1,527 million in the latter; while that with Germany decreased from $345 million to less than $1 million. (Document B) Thus,...
The trend toward a more globalized market has become increasingly developed in the latter half of the 20th century. Emphasis on world trade has become a dominant figure in almost every Nation’s economy. Between 1970 and 2000 world trade has experienced an increase of almost 370 percent. Concurrently, world GDP increased by 150 percent. Trade is beneficial to Nations because it allows the creation of avenues that aid in efficient allocation of resources (Canas & Coronado). Countries can gain from trade when they specialize according to their comparative advantage. This is, when they create conditions where goods and services can be produced at a lower opportunity cost than in any other country. Along the same logic, countries can also make large profits by taking advantage of another countries comparative advantage.
Bentley, J., & Ziegler, H. (2008). Trade and encounters a global perspective on the past. (4th ed., Vol. 1, pp. 182-401). New York: McGraw-Hill.
The main idea of this article is that there were two major waves of globalization, both of which were “superficially similar, but fundamentally different.” The first wave occurred during 1870-1914 and the second from 1960 to present. The superficial similarities between the two include the aggregate trade-to-GDP ratio and capital flow-to-GDP ratios in addition to the importance of reductions in technical and policy barriers to international trade. The fundamental differences, on the other hand, are the impact reductions had on trade and the economic beliefs and initial conditions of the two periods.
When analyzing trade’s effect on state behavior, it is not the mere existence of trade between countries that should be central, rather, the nature of trade that is crucial. This distinction will be explored by studying the arguments of key economic and political thinkers of both the 18th and 20th centuries. The general nature of trade, the role of national government regarding trade and security, trade's capacity to befriend belligerent nations, and finally, the influence of international economic institutions will be explored. In an attempt to present a fairly broad range of sources, this study features the ideas of four influential authors from two time periods and continents: from the 18th Century, Adam Smith and Alexander Hamilton, and from the 20th Century, John Maynard Keynes and Secretary of State Cordell Hull.
Throughout the 18th century, many continents traded their goods in the Trans-Atlantic Trade. This process was the outcome of demand for raw materials in the Old World, and a need to make money in the New World. In addition, this trade was the source of many historical events, and changes in the function of society. The trade paved the path to a new economic structure -- every country was in a race to use as much of their own raw materials as possible, which they got from the colonies. Because the raw materials all came from harsh labor, this gave the white masters feelings of empowerment over their diverse workers in the colonies. The Trans-Atlantic Trade in the 18th century was a necessity in the rising economic principle of mercantilism,
Global trade patterns have changed greatly from 1750 to the present. Certain regions have gained and lost their importance to the world wide economy. This shift in trade from the Indian Ocean to the Atlantic, and finally to the Pacific highlights how different factors influence the demand for different goods.
The commercial activity has been, over the centuries, linked to human activity, due to the need to obtain satisfactory. The evolution of trade throughout history presents issues of immense importance to understand the current configuration of trade, However, for the purposes of this research we will be observing what is free trade so we can understand and interpret every point that we will be talking about in this investigation. Free Trade is an economic concept, referring to the sale of products between countries, duty-free and any form of trade barriers. Free trade involves the elimination of artificial barriers (government regulations) to trade between individuals and companies from different countries.
Schonhardt-Bailey argues that the causes of transition to free trade are three i-words - interests, ideas and institutions. Export sector became more diversified in 1830-1846 in terms of drawn to quantitative explanations for social events, and suggest that a standard concentration indices, and that economic interests as measured by similar methodology may be applied to other historically interesting events.
Looking at trade from an economic point of view, commerce often altered consumption and aided in shaping daily lives. The densely connected world of the modern era, linked by ties of commerce and culture around the planet, certainly has roots in much earlier patterns. For instance in the era of third-wave civilizations; the silk, sea, and sand roads of the afro-Eurasian world and looser network of the American web linked distant people both economically and culturally prompted the emergence of new states, and sustained elite privileges in many ancient civilizations. In those ways, they resembled the globalized world of modern times. (Strayer, 246).
To a large extent the Atlantic World economic system was fundamental in causing or at least accelerating the British Industrial Revolution. However, there were other elements that contributed to the Atlantic World economic system’s success.
The purpose of this report is to analyse the structure and pattern of Australia's trade. The report uses trade statistics from 1999-2000 to 2003-04 and theoretical perspectives to help explain the pattern of trade. The focus will begin with the balance of payments in relation to exports and imports, then move on to the determinants of the terms of trade, and finally, an analysis of why Australia's trade pattern is as it is.
The new trade theory began to emerge in the 1970s when a number of economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade (Wickramasekera, Cronk & Hill 2013). This theory is based on two major concepts that are economies of scale and first-mover advantage. To elaborate:
In order for international trade to work well, governments must allow the world market to determine how goods are sold, manufactured and traded for all to economically prosper. While all nations may have the capability to produce any goods or services needed by their population, it is not possible for all nations to have a comparative advantage for producing a good due to natural resources of the country or other available resources needed to produce a good or service. The example of trading among states comprising the United States is an example of how free trade works best without the interve...