LS5 - Pattern of Trade

Question 1

Pattern of Trade

Answer 1

Nature of trade (imports and exports) between 2 countries, and how it changes over time

Question 2

Comparative advantage

Answer 2

Over time, a country’s natural resources, wage costs, infrastructure, non-price factors (innovation), import controls and ex rate changes, leading to a change in comparative advantage
This will lead to a change in the comp of different industries, resulting in a change in demand for exports as people switch to firms that aren most comp - pattern of trade changes
Ex: UK used to be major steel producer, but comp adv has shifted to other sectors (services, finance etc) so pattern of trade has changed

Question 3

Emerging economy

Answer 3

Economy that is progressing towards becoming more advanced, by means of rapid growth and industrialisation
Emerging economies cause both pattern of trade and size of trade flows to change - they might have more skilled labour, larger workforces, newer and improved infrastructure/manufacturing processes that make it more competitive compared to other economies

Question 4

Growth of trade blocs

Answer 4

Trade blocs remove or reduce barriers to trade making exports within the bloc more competitive and desired, increasing trade flows within the bloc and shifting flows away from other economies

Question 5

Changes in exchange rates

Answer 5

Changes in relative ex rates can change export/import comp
Lower ex rate relative to other economy - exports from country A become cheaper for country B, imports from B to A more expensive - increase in export comp