• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Consider the Extent to Which Economic Theories Effectively Explain the Changing Patterns of Trade in Recent Years. In recent years, there has many changes in international trade,

Extracts from this document...


Economic Theories Consider the Extent to Which Economic Theories Effectively Explain the Changing Patterns of Trade in Recent Years. In recent years, there has many changes in international trade, from the dotcom revolution leading to E-commerce, and finally the most recent change is international trade is globalisation, which has developed over many decades. There have been new trade pattern such as third world countries participating in international trade. Developing countries joining union's i.e. countries join European union to cut down trade barriers A trade pattern is what goods and services a country will trade, and with whom, and in what direction. The trade pattern is one of the major purposes of trade theory, especially which goods a country will export and which it will import. This may be done directly, as the commodity pattern of trade, in indirectly as the factor content pattern of trade. Indeed there are many trade patterns intra and inter industry trade and just one of those picked of a bunch Intra-industry trade refers to the exchange of products belonging to the same industry. An example of international intra industry trade is when be America imports cars from Japan and exports cars to Japan. Inter Industry trade refers to a country only exports certain goods and not importing these goods. This is when Saudi Arabia Exporting Oil and importing Electrical goods. Basically in inter industry trade, whatever a country exports it won't import. Secondly, I would like to explain what a trade pattern is. A trade pattern is what goods and services a country trades, with whom, and in what direction. ...read more.


In my thoughts I generally think that Ricardos Theory of Comparative advantage relates and explains Globalistion indirectly this is because it talks about speclisation now if you look at it carefully and think of all the fresh fruit the we eat. It is produced in countries such as Morocco, now this country specilises in the production of raw goods such as fruits in exchange for money to build a strong currency. The reason I say Ricardos Theory of Comparative advantage relates and explains Globalistion indirectly is because its not about the country anymore its about the company, now if a country charges a lot of tax a company will set up elsewhere hence in economic terms and conditions a company rules. is it any wonder USA are always fining Bill Gates as they fell thereanted by his economic power. One of the major concerns in comparative advanatge is that once all resources finish a war or conflict will occur, for example the recent case in ukraine where they are cutting gas supplies to Russia because of Absoloute resource constraint. Ukraine cut Russian daily gas transit by 60 Mln cubic meters - minister http://www.interfax.ru/e/B/0/28.html?id_issue=11451874 Date viewed 20/01/2006 Another example could be the use of raw materials, such as Gas (see above headline) Regarding Oil governments becoming tough and conflicts such as the petrol protest/strikes. In 1817, David Ricardo looked at Adam Smith's theory and suggested, "there may still be global efficiency gains from trade if a country specializes in those products that it can produce more efficiently than other products - regardless of whether other countries can produce those same products even more efficiently" . ...read more.


Another example of mercantilism in action is the foreign owned liquefied natural gas companies that are going into operation in Baja California. Even though foreign investment in oil and gas is technically illegal in Mexico, these companies apparently are obtaining all needed approvals and permits from the various Mexican agencies. Mercantilism explains the changing pattern of trade in china effectively because many organisations are state owned or are becoming state owned. However, mercantilism does not explain the international trade patterns directly as different countries are in different situations, some countries are in the same strategic group when it comes to international trade such as America and England. Mercantilism relates to inter industry trade because exports are viewed as desirable and imports as undesirable unless they lead to even greater exports. To conclude I feel the theorist have made some excellent predictions in general, however not all theories give direct effective explanations of the changing pattern of trade i.e. globalisation. The above-mentioned theories do correctly explain directly what has happened in the past, but all theories that I have mentioned above explain indirectly the recent changing trade pattern i.e. globalisation. Throughout analysing theories, I have discovered that there will always be a loophole in the theories directly or in directly relating to the changing pattern of trade i.e. globalisation. Through the loophole, some theories effectively explain changing pattern in trade in recent years but not directly and not pinpoint hence creating contradictions leading to inaccurate explanations of Trade patterns. I feel by combing theory of comparative advantage, Heckscher-Ohlin model they explain the changing patterns of trade in recent years. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    Discuss the extent to which globalisation has been beneficial to Africa, China, America or ...

    5 star(s)

    minerals will be take by western MNCs while they are still cheap. Glob will benefit these poorest countries only if we help them and if they have good governance in order to help create a strong and supported free market sector.

  2. Marked by a teacher

    Assess the importance of international trade to the UK economy

    4 star(s)

    The UK has a substantial competitive advantage in financial services and professional and business services, although the UK tends to run a large deficit on tourism and transport.


    inefficient at producing a good or service to specialise in the production of that good it is least inefficient at, compared with producing other goods. The basis for trade in the Ricardian model is differences in technology between countries. Below, we define two different ways to describe technology differences.

  2. Where does the World Trade Organisation fit in the overall scheme of international public ...

    One should search for more systematic and economically literate arguments. In my view, the most intelligently argued, economically plausible and institutionally sensitive treatment in this genre comes from the pen of Dani Rodrik, the brilliant Harvard economist. In his best-known work on globalisation, Professor Rodrik focuses on the distributional consequences

  1. Corruption and Globalisation - Both of them have been so pervasive in recent years. ...

    In order to perpetuate this equation, these firms resist others entry and win contracts through illegal means. - Income inequalities. When just a few members of the population live lavishly leaving the rest to barely manage, it can lead to corruption by necessity.

  2. Explain the Heckscher- Ohlin model of international trade and assess the extent to which ...

    turn generate income for the owner that income is often referred to as "rents". Whereas workers earn "wages" for their efforts in production, the capital owner therefore earns rents. Therefore the assumption of two productive factors, capital and labour allows for the introduction of another realistic feature in production; that of differing factor proportions both across and within industries.

  1. Globalisation of GAP

    When making the decision the company must take into consideration the opportunity costs of the expansion and not neglect the domestic market. Entering into new markets involves a great deal of risk there are many problems associated with selling in an unknown markets.

  2. Evaluate the extent to which government economic policy may have influenced the rate of ...

    An example of another demand management policy is the fiscal policy. This includes taxation such as VAT. VAT rose from 17.5% to 20% on the 4th January 2011. It was introduced in order to gain more tax revenues and therefore improve the government?s deficit.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work