World Economy & International Trade

Assignment for Seminar 3

Irfan Ullah Khan (202)

Question 1
1. List three ways in which international trade today does not differ from the trade
that occurred before World War 1
A large portion of trade still remained between the industrialized countries.
Just like in before World War 1, the main mode of shipping that is preferred for large
goods is shipping through the sea
The similarities that were observed between industrialized nations still remained with
most of them still clinging on to manufacturing as opposed to agriculture.
2. List three ways in which international trade today does differ from the trade that
occurred before World War 1
There was a change in the imports and exports among some of the countries in the world
such as US which was exporting more agricultural commodities whereas today, a bulk of
US’s exports are manufactured goods.
There is also a change in the mode of shipping by sea. There came the introduction of
container shipping which is in use to date as opposed to the past where the mode of
shipping was mainly by bags, crates and barrels.
Countries imposed restrictions on trade especially on imports and also on migration.

Question 2
1. From the table, what is the total amount of trade within Europe? What percentage of total
world trade is this?
Total amount of trade within Europe = 4665.31347861755
Percentage of total world trade = 25.226%
2. What is the total amount of trade (in either direction between Europe and North America?
Add that to the total trade within Europe, and calculate the percentage of this to the world
total.
Total amount of trade between Europe and North America = 918.98165
Plus the total trade within Europe = 5584.29513
Percentage of this to the world total. = 30.2%
3. What is the total amount of trade within the Americans (i.e between North America,
Central America, and South America and within each of these regions)? What percentage
of total world trade is this?
Total amount of trade within the Americans = 1817.53075
Percentage of total world trade = 9.83%
4. What is the total value of exports from Europe and the American, and what percentage of
the world total is this?
Total value of exports from Europe and the American = 9998.13750
Percentage of the world total = 54.06%
5. What is the total value of exports from Asia and what percentage of the world total is this?
Total value of exports from Asia = 5917
Percentage of the world total = 32%
6. What is the total value of exports from the Middle East and the commonwealth of
independent states, 13 and what percentage of the world total is this?
Total value of exports = 2022.90682
Percentage of the world total = 10.94%
7. What is the total value of exports from Africa and what percentage of the world total is this
Total value of exports from Africa = 555
Percentage of the world total = 3%
8. How do you answer to (b) through (h) compare with the shares of worldwide trade
shown in table 1.1

Question 3
Over the past few decades, East Asian economies have increased their share of the
world GDP. Similarly, Intra-East Asian trade- that is, trade among East Asian nations- has
grown as a share of the world trade. More than that, East Asian countries do an increasing
share of their trade with each other. Explain why, using the gravity model.
The gravity model of international trade combines three variables in the analysis of
international trade; the trade flows, distance as well as economic dimensions of the countries
involved. Therefore, for the model predicts that bilateral trade flows between two countries or in
this case units based on the economic dimensions as well as the distance between the two units.
One of the major influences in their trade is the regional bilateral agreements that has highly
favored the regional trade and has been able to flourish given the similar economic dimensions
that the nations share among with other factors which have influenced the development of
industries that are more similar and supportive of each other hence an increase in the multilateral
and regional trade. The agreements have also encouraged a growth of exports to other parts of
the world while facing a reduction on reliance on the outside world hence a reduced extra-
regional import. This has therefore enabled them to grow their share of the global trade and also
be able to grow trade among the East-Asian nations. This therefore implies that distance does not
have a major impact on the East-Asian trade.