13 Global interdependence 13.1 Trade flows and trading patterns Global trade
Revised
Trade refers to the exchange of goods and services for money. World trade now accounts for 25% of GDP, double its share in 1970. Goods and services purchased from other countries are termed imports. In contrast, goods and services sold to other countries are called exports. The difference between the two is known as the balance of trade. Visible trade involves items that have a physical existence and can actually be seen, such as oil and manufactured goods. Invisible trade is trade in services, which include travel and tourism, and business and financial services.
Trade deficit is when the value of a country’s imports exceeds the value of its exports. Trade surplus is when the value of a country’s exports exceeds the value of its imports.
Global inequalities in trade flows
Europe, Asia and North America dominate global trade (Table 13.1). Germany was the largest exporter of merchandise in 2008 with 9.1% of the global share, followed by China and the USA. The top 10 countries accounted for 50.7% of world exports. However, the USA dominates imports by a huge margin – over 13% of the world total, followed by Germany and China. The share of developing economies in world merchandise trade set new records in 2008. The emergence of different generations of newly industrialised countries since the 1960s has radically altered the trade pattern that existed in the previous period. Table 13.1 World merchandise trade by region, 2008 Region World North America South and Central America Europe
Exports ($ billion)
Imports ($ billion)
15775
16120
2049
2909
602
595
6459
6833
Commonwealth of Independent States
703
493
Africa
561
466
Middle East
1047
575
Asia
4355
4247
Source: WTO
In recent decades trade in commercial services has increased considerably. However, in terms of total value it is still less than a quarter of that of merchandise trade.
Factors affecting global trade Resource endowment
The Middle East countries dominate the export of oil because of their large oil reserves. Countries endowed with other raw materials such as food products, timber, minerals and fish also figure prominently in world trade statistics. In the developed world the wealth of countries such as Canada and Australia has been built to a considerable extent on the export of raw materials in demand on the world market. Raw-material-rich developing countries such as Brazil and South Africa have been trying to follow a similar path. In both cases, wealth from raw materials has been used for economic diversification to produce more broadly based economies. 182
Cambridge International AS and A Level Geography Revision Guide
