The Changing Pattern of World Trade
The Changing Pattern of World Trade
World trade is a moving target. The direction and composition of world trade is quite different today from what it was a generation ago, and even more different from what it was a century ago. Let’s look at some of the main trends.
Has the World Gotten Smaller?
In popular discussions of the world economy, one often encounters statements that modern transportation and communications have abolished distance, so that the world has become a small place. There’s clearly some truth to these statements: The Internet makes instant and almost free communication possible between people thousands of miles apart, while jet transport allows quick physical access to all parts of the globe.
On the other hand, gravity models continue to show a strong negative relationship between distance and international trade. But have such effects grown weaker over time? Has the progress of transportation and communication made the world smaller? The answer is yes—but history also shows that political forces can outweigh the effects of technology. The world got smaller between 1840 and 1914, but it got bigger again for much of the 20th century.
What Do We Trade?
When countries trade, what do they trade? For the world as a whole, the main answer is that they ship manufactured goods such as automobiles, computers, and clothing to each other. However, trade in mineral products—a category that includes everything from copper ore to coal, but whose main component in the modern world is oil—remains an important part of world trade.
Agricultural products such as wheat, soybeans, and cotton are another key piece of the picture, and services of various kinds play an important role and are widely expected to become more important in the future.
Service Offshoring
One of the hottest disputes in international economics right now is whether modern information technology, which makes it possible to perform some economic functions at long range, will
World trade is a moving target. The direction and composition of world trade is quite different today from what it was a generation ago, and even more different from what it was a century ago. Let’s look at some of the main trends.
Has the World Gotten Smaller?
In popular discussions of the world economy, one often encounters statements that modern transportation and communications have abolished distance, so that the world has become a small place. There’s clearly some truth to these statements: The Internet makes instant and almost free communication possible between people thousands of miles apart, while jet transport allows quick physical access to all parts of the globe.
On the other hand, gravity models continue to show a strong negative relationship between distance and international trade. But have such effects grown weaker over time? Has the progress of transportation and communication made the world smaller? The answer is yes—but history also shows that political forces can outweigh the effects of technology. The world got smaller between 1840 and 1914, but it got bigger again for much of the 20th century.
What Do We Trade?
When countries trade, what do they trade? For the world as a whole, the main answer is that they ship manufactured goods such as automobiles, computers, and clothing to each other. However, trade in mineral products—a category that includes everything from copper ore to coal, but whose main component in the modern world is oil—remains an important part of world trade.
Agricultural products such as wheat, soybeans, and cotton are another key piece of the picture, and services of various kinds play an important role and are widely expected to become more important in the future.
Service Offshoring
One of the hottest disputes in international economics right now is whether modern information technology, which makes it possible to perform some economic functions at long range, will