International trade

International trade is the exchange of capital, goods, and services across international borders or territories. It is the exchange of goods and services among nations of the world.[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.

Characteristic of global trade

Trading globally gives consumers and countries the opportunity to be exposed to new markets and products. Almost every kind of product can be found on the international market: food, clothes, spare parts, oil, jewellery, wine, stocks, currencies and water. Services are also traded: tourism, banking, consulting and transportation. A product that is sold to the global market is an export, and a product that is bought from the global market is an import. Imports and exports are accounted for in a country's current account in the balance of payments.[2]

Ancient Silk Road trade routes across Eurasia

Industrialization, advanced technology, including transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders. 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. The main difference is that international trade is typically more costly than domestic trade. The reason is 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.

Another difference between domestic and international trade is that factors of production such as capital and labor are typically 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, labor 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 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]

International trade is also a branch of economics, which, together with international finance, forms the larger branch called international economics.

History

The history of international trade chronicles notable events that have affected the trade between various economies.

Models

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

Largest countries by total international trade

Volume of world merchandise exports

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

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 32,180 9,415 41,595
-  European Union 3,821 1,604 5,425
1  United States 3,706 1,215 4,921
2  China 3,686 656 4,342
3  Germany 2,395 571 2,966
4  Japan 1,252 350 1,602
5  United Kingdom 1,045 520 1,565
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 (exports)

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 2012
2 Electrical, electronic equipment $1,833,534,414 2012
3 Machinery, nuclear reactors, boilers, etc. $1,763,371,813 2012
4 Vehicles other than railway $1,076,830,856 2012
5 Plastics and articles thereof $470,226,676 2012
6 Optical, photo, technical, medical, etc. apparatus $465,101,524 2012
7 Pharmaceutical products $443,596,577 2012
8 Iron and steel $379,113,147 2012
9 Organic chemicals $377,462,088 2012
10 Pearls, precious stones, metals, coins, etc. $348,155,369 2012

Source: International Trade Centre[5]

Observances

President George W. Bush observed World Trade Week on May 18, 2001, and May 17, 2002.[6][7] On May 13, 2016, President Barack Obama proclaimed May 15 through May 21, 2016, as World Trade Week, 2016.[8] On May 19, 2017, President Donald Trump proclaimed May 21 through May 27, 2017, as World Trade Week, 2017.[9][10]

See also

Lists

Notes

  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 Freely accessible. 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. ↑ International Trade Centre (ITC). "Trade Map - Trade statistics for international business development".
  6. ↑ 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.
  7. ↑ 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.
  8. ↑ "Presidential Proclamation -- World Trade Week, 2016". whitehouse.gov. Washington, D.C.: White House. May 13, 2016. Retrieved April 11, 2017.
  9. ↑ 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.
  10. ↑ "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.

References

Data

Official statistics

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

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