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, 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, jewelry, 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.

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.[2]

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

Top 50 Exporting Countries
Countries ($Billions)
1.  China
  
 $2,143
2.  United States
  
 $1,510
3.  Germany
  
 $1,309
4.  Japan
  
 $622
5.  South Korea
  
 $548
6.  France
  
 $510
7.  Hong Kong
  
 $505
8.  Netherlands
  
 $476
9.  Italy
  
 $450
10.  United Kingdom
  
 $436
11.  Canada
  
 $411
12.  Mexico
  
 $381
13.  Singapore
  
 $377
14.  Russia
  
 $341
15.  Taiwan
  
 $335
16.  UAE
  
 $333
17.   Switzerland
  
 $303
18.  Spain
  
 $277
19.  India
  
 $272
20.  Belgium
  
 $259
21.  Thailand
  
 $212
22.  Saudi Arabia
  
 $202
23.  Poland
  
 $190
24.  Brazil
  
 $190
25.  Australia
  
 $188
26.  Malaysia
  
 $175
27.  Vietnam
  
 $162
28.  Turkey
  
 $152
29.  Sweden
  
 $151
30.  Indonesia
  
 $148
31.  Austria
  
 $142
32.  Czech Republic
  
 $131
33.  Ireland
  
 $125
34.  Norway
  
 $102
35.  Denmark
  
 $95
36.  Hungary
  
 $89
37.  South Africa
  
 $81
38.  Qatar
  
 $77
39.  Slovakia
  
 $73
40.  Puerto Rico
  
 $71
41.  Argentina
  
 $65
42.  Iran
  
 $64
43.  Chile
  
 $62
44.  Finland
  
 $61
45. Israel
  
 $56
46.  Kuwait
  
 $55
47.  Iraq
  
 $54
48.  Romania
  
 $54
49.  Portugal
  
 $54
50.  Kazakhstan
  
 $46
Volume of world merchandise exports

Top traded commodities (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[3]

See also

Lists

Notes

  1. ↑ "Trade - Define Trade at Dictionary.com". Dictionary.com.
  2. ↑ Kusum Mundra (October 18, 2010). "Immigrant Networks and U.S. Bilateral Trade: The Role of Immigrant Income". papers.ssrn. Retrieved 2011-09-01. 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.
  3. ↑ International Trade Centre (ITC). "Trade Map - Trade statistics for international business development".

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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