Pattern of Trade

Question 1

What is the pattern of trade?

Answer 1

The nature of trade between countries, considering imports and exports.

Question 2

What are the 4 factors that influence the pattern of trade?

Answer 2

1) Comparative advantage.
2) Emerging economies.
3) Changes in relative exchange rates.
4) Growth of trading blocs.

Question 3

How does comparative advantage influence the pattern of trade?

Answer 3

When countries develop cost advantages in the production of certain goods, the pattern of trade adjusts, reflecting this advantage. Lower production costs lead to increased trade.

Question 4

How does the growth of trading blocs influence the pattern of trade?

Answer 4

Trading blocs, e.g. the EU, are designed to increase trade between member countries.

Question 5

How do emerging economies influence the pattern of trade?

Answer 5

As countries grow, they tend to import more, but they will also have to export more to fund their foreign expenditure. This changes the pattern of trade. E.g. China is the world’s largest exporter, yet 50 years ago it did not trade much with the world.

Question 6

How do changes in the relative exchange rate influence the pattern of trade?

Answer 6

Changes in exchange rate can affect the competitiveness of a country when exporting and importing.