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International Trade

Essay by   •  May 11, 2011  •  795 Words (4 Pages)  •  1,172 Views

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International trade is the purchase, sale, or exchange of goods and services across national borders. International trade provides a country's citizens a greater choice of goods and services and is important in the creation of jobs in many countries. (Wild, Wild, and Han 2005)

The quantity of world output in a given year will have an effect on the level of international trade for that year. The slower a country's economic output the slower the volume of international trade; a higher output spears greater international trade. In times of economic recession trade will slow because people are less certain about their financial future and will tend to buy fewer domestic or imported products. Another reason output and trade move simultaneously is a country that is in a recession often has a currency that is weak relative to other nations, thereby making imports more expensive than a country's domestic products. With world output and trade being so closely related the amount of world trade has improved considerably relative to world output and can be attributed to the fact that the goods traded have become less expensive over time compared to goods that are sold domestically.

Sixty percent of international trade patterns, in merchandise, are dominated by the flow of high-income economies of the world followed by a thirty-four percent trade between high, middle, and low income nations leaving trade between middle and low income countries at six percent. The importance of knowing these statistics lets us know if there is a high level of trading going on between some of the richest and poorest nations of the world and also helps in determining if there is a considerable amount of trade with nations whose economy may be poor. There are even custom agencies gathering and recording information on the quantities and value of exports and imports that come across their borders. But make no mistake; this type of information can be misleading. For example, some countries intentionally alter the reporting on trade when it relates to equipment for the military as well as other types of sensitive material. But regardless of these discrepancies this type of record gathering is instrumental in letting us know which countries are trading with whom.

If trading suddenly stopped among the nations of the world it would cause unspeakable pandemonium. If the United States stopped trade with countries like Chile and Brazil products like coffee, cocoa, tea, most tropical fruit, various spices and herbs will either be in short supply (which may lead to a price increase because supply is not at a level to meet demand) or no longer available. If the U.S. stopped all trade some or all of the following may become unavailable domestically. German beer, certain models of foreign cars like Ferrari and Jaguar, and Italian leather for the manufacturing of shoes and handbags would no longer be readily available. The U.S. consumer will also have to live without the modern conveniences technology affords us like certain brands of televisions, DVD players, and video gaming systems, as well as office and

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