The value of world trade has been growing at a faster rate than world GDP. Asses the factors which might explain this trend. Evaluate the disadvantages of further trade liberalisation to the UK.

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The value of world trade has been growing at a faster rate than world GDP. Asses the factors which might explain this trend. (20)

Between 1980 and 2002, world trade has more than tripled while world output (measured in terms of GDP) has only doubled. The rise in trade relative to output is common across countries and regions. Some of this increase can be accounted for by the fact that traded goods have become cheaper over time relative to those goods that are not traded. However, even in nominal terms the trade to GDP ratio has increased over this period. This means other factors may also be contributing to the phenomenon; one such factor is globalisation. Globalisation has no definitive meaning although it is described by the IMF as "the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, freer international capital flows, and more rapid and widespread diffusion of technology".

As stated by the IMF in their definition, technology has played an integral part in the rise of globalisation. The ascent of communication methods such as the internet and email have allowed firms to become multinational due