Patterns of Foreign Trade

Trade is the exchange of goods and services between countries. Goods bought into a
country are called imports, and those sold to another country are called exports.
Developed countries have a greater share of global trade than developing countries .
Some patterns of International trade are ;-

- Saudi Arabia exports oil

- Ghana exports coca.
- Brazil exports coffee.
- Switzerland export chemicals , pharmaceutical, watches and jewellery
- Japan Export automobiles, consumer electronics and machine tools.
- U.S. buys lots of its textiles from places like Honduras and Guatemela
Trade Theories

 Trade theory helps managers and government policy makers focus on three
things;-

What?

With whom?

How much?
Reasons of International trade
1. Differences in Technology
Eg:- Apple is also highly dependent on key Japanese manufactures

2. Differences in Resource Endorements

Eg:- U.S. imports textiles from Bangladesh
since the efficient production of textiles
requires a relatively cheap labor force.

-Saudi arabia’s oil and gas industry

3. Difference in Demand
Eg:- Canadians demands for beer, the dutch more wooden shoes and the Japanese more
fish than Americans would , even if they all faced the same prices .
4. Existence of Economies of sale in production
Eg:- Many automobiles/ cell phones companies ( Samsung, ford motors, Mercedes Benz) assembles
its products in india . A large number of production units provide the benefit of economy of scale.
5. Supportive Government Policies
Eg:- Indian government offers incentives and facilities to the unites in SEZs for attracting foreign
investments like –
 Duty free import domestic procurement of goods for development, operation and maintenance
of SEZs unit.
 Single window clearance for Central and State level approvals.
International trade allows a country:-

 To specialize in the manufacture and export of products that it can produce efficiently.

 To import products that can be produced more efficiently in other countries.

 Create jobs and boost economic growth.

 Companies gain a competitive advantage in global trade.