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Pattern of World Trade UPSC | Pattern of International Trade

What is trade?
 The exchange of goods and services between countries is called trade. 

  • Import: Materials or services brought from abroad. 
  • Export: Materials or services sold abroad. 

 As of now, no country can be self-sufficient in all the resources, hence trade is needed for survival. The meaning of world trade is the exchange of goods & services at the global level. World trade is in two types:

types of world trade
 types of world trade
In bilateral trade, the exchange of commodities happened between the two countries. 
In multilateral trade, the exchange of commodities among the countries. 

The commodities in world trade can be classified into the following categories:  

  • Food  
  • Raw material 
  • Energy stuff 
  • The final product or manufactured product 

The pattern of world trade:

 Developed countries have a larger share (more than 55 % of global world trade) and they export valuable items such as cars, Machinery, and other finished goods. Although, developing countries share a larger population and areas but share only approximately 40 % of global trade. 
World export is dominated by the European Union. 
As per export, the following continents dominate global trade: 

  • Europe: 33 % of world trade is done by European countries. 
    • The following reason favors such a high volume trade: 
      • Dense population 
      • Very highly industrialized and developed region 
      • High-income level of population. 
  • Asia: 32 % 
  • North America: 14 % 
  • Middle east: 7% 
  • Africa: 4% 

 Shifting Pattern of Global trades:
 The share of developed countries in global trade decreasing over the years, whereas the share of developing countries in global trade increasing. 
If we see world trade data from 1995 to 2010: 

  • China's share rose from 2.6 to 10 %. Now, as of 2020 china share, approximately 12.8 % of global trade and it is equivalent to the USA's share. 
  • Latin America: 4.5 % to 5.9 % 
  • Africa: 2 to 3.2 %
  • India, as of 2019 shares 1.7 % of global trade. 

 The following are influencing factors of the world trade

  • Availability of raw materials for industries 
  • Stage of economic growth 
  • Population & income level of the population 
  • Foreign investment 
  • Government policies 
Values-wise share of global trades on decreasing order:
  • USA
  • China
  • Germany
  • Japan
  • Netherland
Try to solve the following questions:
  • "Linkages between resource-endowed regions and resources-utilizing regions determine the pattern of international trade." Elaborate with suitable examples. ( UPSC 2016, 150 words, 15 marks)
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