patterns in international trade

7/29/2019 Patterns in International Trade

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PATTERNS IN INTERNATIONAL

TRADE

GROUP 10

Submitted to: Submitted by:Dr. Mohan Monterio VARSHA SENGUPTA 12115

VEENA U 12116

VIMAL S 12117

VINAY PRAKASH 12118

VISHAK R 12119

YASWANTH M 12120

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Introduction

International trade is the exchange of capital, goods,

and services across international borders or territories. In most

countries, such trade represents a significant share of Gross Domestic

Product(GDP).

Industrialization,advanced transportation, globalization, multination

al corporations, and outsourcing are all having a major impact on the

international trade system.

Increasing international trade is crucial to the continuance

of globalization. Without international trade, nations would be

limited to the goods and services produced within their own borders.

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Countries under study The countries which we have taken for study include:

Developed countries:

USA, Norway, Japan

Developing countries:

India, China

Under-developed countries:

Nepal

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1991

Distinct trade groups: The G7 countries(Developed countries) Canada,

France, Germany, Italy, Japan, U.K. and the U.S.

The O5(Emerging economies) countries Brazil,

China, India, Mexico and South Africa.

The Soviet republics formed distinct clusters of

countries.

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2001

The trading patterns of the G7 and O5 had

essentially merged.

In contrast, the former Soviet republics had

moved away from these other two groups and

had become more similar to each other in terms

of trading patterns.

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United States of America(USA)

The economy of the United States is the world's largest national

economy. Its nominal GDP was estimated to be over $15 trillion in

2011,approximately a quarter of nominal global GDP.

Its GDP at purchasing power parity is the largest in the world,

approximately a fifth of global GDP at purchasing power parity. TheU.S. economy also maintains a very high level of output.

The U.S. is one of the world's wealthiest nations with per capita

GDP of $48,450, the 7th highest in the world.

The U.S. is the largest trading nation in the world. Its four largest

export trading partners are as of 2010: Canada, Mexico, China, and

Japan.

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USA Trade data for 2012

Exports increased to $185.0 billion in June from $183.3 billion in May(revised). Goods were $132.8 billion in June, up from $130.9 inMay. Services were $52.2 billion in June, down from $52.4 billion in May.

Imports decreased to $227.9 billion in June from $231.4 billion in May(revised). Goods were $190.3 billion in June, down from $193.9 billion in

May. Services were $37.6 billion in June, up from $37.5 billion in May.

For goods, the deficit was $57.5 billion in June, down from $62.9 billionin May. For services, the surplus was $14.6 billion in June, down from$14.9 billion in May.

It is interesting to note as well that the United States is a leader in oilproducing nations but is not a leader in oil exportation.

This is caused by the USs incredible oil use, which causes a staggeringdeficit for the oil trade annually.

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Trade Commodities in the USA

Two-thirds of U.S. exports are material goods. The largest sub-category

(25%) is capital equipment, such as computer equipment,semiconductors and medical equipment. The second largest (20%) is

industrial machinery and equipment, including plastics, chemicals and

petroleum products.

Only 5% of exports are automotive, while 6% is food and beverages.Despite being such a large exporter, the U.S. exports less than it

imports.

The U.S. imports more than it exports. As a result, it's the world'slargest importer. More than 80% of U.S. imports are goods. The largest

category ($756.6 billion in 2011) is industrial machinery and

equipment, which includes plastics and chemicals. Within this, the

largest category is oil and related petroleum products. In 2011, the U.S.

imported $439.3 billion of petroleum products, the highest level since2008. 8


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Foreign Direct Investment in the United States and U.S. DirectInvestment Abroad, Annual Flows, 1990-2007 (in billions of $)

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NORWAY

Norway's trade has been mostly with the EU, a trend that has continued

to increase. Norways GDP per capita was 64,600 in 2008, which makes

it the second highest in the European Economic Area (EEA) after

Luxembourg.

In 2008, Norway emerged as the EUs most valuable import partner for

trade in good totalling at 91.85 billion. Norways trade with the EUindicates a surplus of48.27 billion.

Further, the European Economic Area (EEA) Agreement will be essential

for safeguarding the Norwegian market interests in the huge European

market.

Norways traditional economic activities include fisheries, fish farming

and shipping. Norways exports tripled between the years 1974 and

1981, mostly because of the solid performance of its petroleum sector.

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Norway Trade: Exports Commodities Oil and gas

Shipping Wood products

Industrial machinery

Transport equipment

Hydroelectricity

Fish farming Food processing

Seafood

Timber

Forests

Chemicals Metals, particularly semi-finished steels, ferro-alloys and aluminium

Unwrought metals

Construction and operation of massive offshore installations and technology industry

Other mineral resources of Norway are copper, lead iron ore, zinc, nickel, titanium,

pyrites, and nickel. 12


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Norway Trade: Imports Commodities

Capital goods Fuels

Industrial supplies

Machinery

Transportation Food items

Metals

Chemicals

Norways main trading partners are UK, Netherlands, Germany,

Sweden, US, France, and Denmark.

Norways exported services totalled to31.1 billion whereas the

countrys imports totalled to 29.6 billion.13


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Share of Imports & Exports

Share ofNorways import of goods 2011

Share ofNorways export of goods 2011

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JAPAN

Japan is a major economic power in the world.

Economic growth has raised the standard of living of the

Japanese people to that of the United States and higher.

Income is more evenly distributed in Japan than in the UnitedStates.

Like the United States, Japan's economy has moved from

manufacturing towards services. Its companies havesuccessfully used the countries of Southeast Asia as pools of

low cost labour. The change to a more service economy also

shows changing tastes of Japanese consumers.

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EXPORTS & IMPORTS - JAPAN

The Japanese economy is one of the third largest in the world. Only

the USA and China have a higher GNP (Gross National Product). TheJapanese currency is the Yen

Exports: Japan's main export goods are cars, electronic devices andcomputers. Most important trade partners are China and the USA,followed by South Korea, Taiwan, Hong Kong, Singapore, Thailandand Germany.

Imports: Japan has a surplus in its export/import balance. The mostimportant import goods are raw materials such as oil, foodstuffsand wood. Major supplier is China, followed by the USA, Australia,Saudi Arabia, South Korea, Indonesia and the United Arab Emirates.

Industries: Manufacturing, construction, distribution, real estate,services, and communication are Japan's major industries today.Agriculture makes up only about two per cent of the GNP. Mostimportant agricultural product is rice. Resources of raw materialsare very limited and the mining industry rather small.

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http://www.japan-guide.com/e/e2043.htmlhttp://www.japan-guide.com/e/e2043.html


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JAPAN BALANCE OF TRADE

Japan reported a trade surplus equivalent to 62 Million JPY in June of2012. Historically, from 1979 until 2012, Japan Balance of Trade

averaged 649.0 Billion JPY reaching an all time high of 1608.7 Billion

JPY in September of 2007 and a record low of -1476.9 Billion JPY in

January of 2012. Exports have been the main engine of Japan's

economic growth in the past six years.

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Imports & Exports of Japan

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INDIA

Prior to the 1991 economic liberalisation, India was a closedeconomy due to average tariffs exceeding 200 percent and theextensive quantitative restrictions on imports. Foreign investmentwas strictly restricted to only allow Indian ownership ofbusinesses. Since the liberalisation, India's economy has mainlyimproved due to increased foreign trade.

Imports: Indian imports were worth 35371 Million USD in June of 2012.

Historically, from 1994 until 2012, India Imports averaged 12033.5Million USD reaching an all time high of 45282.0 Million USD inMay of 2011 and a record low of 1924.0 Million USD in May of1994.

India is poor in oil resources and is currently heavily dependenton coal and foreign oil imports for its energy needs. Otherimported products are: machinery, gems, fertilizers and

chemicals. Main import partners are European Union, SaudiArabia and United States. 19


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EXPORTS OF INDIA

India exports were worth 25067 Million USD in June of 2012.

Historically, from 1994 until 2012, India Exports averaged 8350.1

Million USD reaching an all time high of 30418.0 Million USD in

March of 2011 and a record low of 1805.0 Million USD in May of

1994.

Exports amount to 22% of Indias GDP. Gems andjewellery

constitute the single largest export item, accounting for 16% of

exports.

India is also leading exporter of textile goods, engineering goods,

chemicals, leather manufactures and services. Indias main export

partners are European Union, United States, United Arab Emirates

and China 20


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Imports & Exports of India

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Foreign Direct Investment(FDI) in India

Starting from a baseline of less than $1 billion in 1990, a recent UNCTAD

survey projected India as the second most important FDI destination

(after China) for transnational corporations during 20102012.

The sectors which attracted higher inflows were services,

telecommunication, construction activities and computer software andhardware. Mauritius, Singapore, the US and the UK were among the

leading sources of FDI.

According to Ernst and Young, foreign direct investment in India in 2010was $44.8 billion, and in 2011 experienced an increase of 13% to $50.8

billion. India has seen an eightfold increase in its FDI in March 2012

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FOREIGN DIRECT INVESTMENT IN INDIA

FDI in India over the years:

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CHINA

International trade has been used to bring in new equipment andtechnologies and to meet scarcities in the domestic economysince China has sought to modernize its economy.

Exports have been used as a means of producing foreign earnings

to pay for the imports. The state has sought to maintain aneven balance of trade so that the country can pay for importsrather than buying on credit.

With 1.2 billion people and the world's fastest growing majoreconomy, China is hailed as potentially the market of allmarkets, which has helped to attract investments from aroundthe world at such a magnitude that China is now the secondlargest recipient of foreign capital (next only to the United States).

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CHINA - IMPORTS

China imports were worth 151.8 Billion USD in July of 2012.Historically, from 1990 until 2012, China Imports averaged 42.4

Billion USD reaching an all time high of 162.4 Billion USD in May

of 2012 and a record low of 2.6 Billion USD in January of 1990.

China imports mainly commodities:

Iron and steel, oil and mineral fuels as well as machinery and

equipment, plastics, optical and medical equipment and organic

chemicals.

Chinas main imports partners are: Japan, European Union, South

Korea, Taiwan and ASEAN countries.

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CHINA - EXPORTS

China exports were worth 176.9 Billion USD in July of 2012.Historically, from 1990 until 2012, China Exports averaged 48.8

Billion USD reaching an all time high of 181.1 Billion USD in May

of 2012 and a record low of 2.8 Billion USD in January of 1990.

Export growth has continued to be a major componentsupporting China's rapid economic growth. Exports of goods and

services constitute 39.7% of its GDP.

China major exports are: Office machines & data processingequipment, telecommunications equipment, electrical machinery

and apparel & clothing.

Chinas largest export markets are European Union, United States,

Hong Kong, Japan and South Korea26


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Trade (expressed in billions of US$): China

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YEAR EXPORTS IMPORTS

1975 7.689 7.926

1980 18.099 19.941

1985 27.350 42.252

1990 62.091 53.345

1995 148.797 129.113

1998 183.589 140.305

SOURCE: International Monetary Fund. International Financial StatisticsYearbook 1999


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China - Commodities in 2011

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NEPAL

An isolated, agrarian society until the mid-20th century, Nepal entered

the modern era in 1951 without schools, hospitals, roads,telecommunications, electric power, industry, or civil service.

The country has, however, made progress toward sustainable economic

growth since the 1950s and is committed to a program of economicliberalization.

Nepal has used a series of five-year plans in an attempt to make

progress in economic development. It completed its ninth economic

development plan in 2002; its currency has been made convertible, and17 state enterprises have been privatized. Foreign aid accounts for more

than half of the development budget. Government priorities over the

years have been the development of transportation and communication

facilities, agriculture, and industry.30


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NEPAL

Agriculture remains Nepal's principal economic activity,

employing 80% of the population and providing 37% of GDP. Only

about 20% of the total area is cultivable.

Rice and wheat are the main food crops. The lowland Terai region

produces an agricultural surplus, part of which supplies the food-

deficient hill areas.

The export-oriented carpet and garment industries have grown

rapidly in recent years and together now account for

approximately 70% of merchandise exports.

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Nepal Exports, Imports & Balance of Trade

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Comparison of Imports across Countries

0

50000

100000

150000

200000

250000

india china japan united states norway nepal

import(million usd)

import(million usd)

Comparison of the 6 countries under study Imports:

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Comparison of Exports across Countries

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000


export(million usd)

export(million usd)

Comparison of the 6 countries under study Exports:

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Comparison of Balance of Trade

-50000

-40000

-30000

-20000

-10000

0

10000

20000

30000


balance of trade

balance of trade

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Example of Trade Pattern Crude Oil

Crude oil is perhaps the most researched industry of

primary product.

Oil production is a pretty straight forward industry,meaning countries either have it or they do not.

It makes the countries to be either exporters orimporters of crude oil and much revenue in the trade

worldwide is from the crude oil.

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Study Conclusions - Exports

Two major exports happen in Manufacturing and Servicessector. Countries like China export more of manufacturinggoods whereas India exports more in the services sector.

Exporting oil is a very profitable market for those selected

countries that have the natural oil resources.

The market in generally spread out with the top tenexporting nations averaging 4-7% of the total market shareor 13.5 billion dollars a year.

Saudi Arabia is typically the top exporter followed by Russia,Norway, Iran, and the UAE, which all compete for the nexttop spots.

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WTA Total Value of Oil Exports to the World in millions and as a percentage

2000 2001 2002 2003

UK 22894 4.00 21436 4.34 20909 4.32 22964 3.84

Fm USSR 42502 7.42 44479 9.01 49461 10.21 64783 10.84

Mexico 16789 2.93 13154 2.67 15073 3.11 19630 3.29

Iran 26099 4.56 20261 4.11 23151 4.78 28115 4.71

UAE 26428 4.61 22054 4.47 18199 3.76 25484 4.26

Nigeria 26719 4.67 18884 3.83 17271 3.57 24069 4.03

Venezuela 27860 4.86 21766 4.41 20139 4.16 20121 3.37

Libya 12968 2.26 11551 2.34 9964 2.06 13579 2.27

Netherlands 13354 2.33 12817 2.60 12201 2.52 14132 2.37

Iraq 16214 2.83 11702 2.37 8850 1.83 8300 1.39

Norway 34025 5.94 30282 6.14 28706 5.93 32359 5.42

Algeria 13271 2.32 10426 2.11 10571 2.18 14448 2.42

Canada 18051 3.15 15933 3.23 17383 3.59 22247 3.72

Saudi Arabia 75839 13.24 68479 13.88 55162 11.39 70181 11.75

Russia 33448 5.84 34952 7.08 39666 8.19 50791 8.50

Kuwait 17073 2.98 13314 2.70 13354 2.76 15894 2.66

USA 10464 1.83 9420 1.91 8981 1.85 10818 1.81

Other 24.22 22.82 23.79 23.37

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Study Conclusions Oil Imports

Importing oil is a necessary trade for every industrialized

nation, except for the petroleum rich nations.

China, even though it is a developing country, has aTrade surplus, i.e. its Exports are more than imports.

Over the last 5 years, the United States has beenfollowed by Japan, China, Germany, France, India, the

Netherlands, and the United Kingdom in differing order.

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Conclusion

International Trade has remained relatively consistent over the past

decade.

Oil and gasoline have been consistently important to industrialized

nations for the past decade, but the future might hold more

interesting trade patterns.

The rise of alternative energy sources and alleviation of

environmentally harming products could cause a sudden decline in the

worlds demand.

This would have an incredible effect on the countries that solely

depend on oil as revenue

The future trade patterns of oil seem to be a good deal more unstable

than in the past decade.

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References & Bibliography:

Web references:

http://www.wto.org/

http://www.tradingeconomics.com/

http://www.nationsencyclopedia.com/economies

http://en.wikipedia.org/ http://www.un.org/en/

Bibliography:

International Business by Charles W Hill and Arun KumarJain

Development, Trade and WTO by Bernard Hoekman andPhilip English, Washington D.C.

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patterns in international trade

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