International Trade

International Trade

The connection between trade and world output is similar to that of water running in and draining out of a sink. If the water is running slow and smoothly the sink will keep a steady level. But if the water is running fast and anxiously then the sink can not empty fast enough to keep up and fills very quickly. The faster the world produces products to trade the more trading is done. The slower it produces the less there is to trade.

Trade slows when people are doubtful about their futures and the country is unsure of what’s to come, they buy fewer products than ever before. When a country is in recession the value of its legal tender is weak to that of other countries. This makes the prices of imports go up while the price of home goods seem less.

The US is on a verge of a monetary recession and our currency is loosing value. This will make imports more expensive for us while driving down the prices of our products we trade.

Most countries have customs organizations that keep record of the destination of all exports and the starting place of all imports. They also keep track of the amounts and values of merchandise crossing their borders. Though they try, some of this information is not recorded correctly. Some governments cover up the correct information on some of their trades, with products like military gear and sensitive commodities.

In some instances there are underground markets (black markets) that trade comprehensively and this can alter the real image of trade among nations. The data that customs collects reveal only general trade patterns among all nations in the world.

For international trade to work proficiently most countries need large cargo ships to transport products over oceans from one country to the next from port to port. Looking at the diagram on page 155 in our text book, it shows that Greece and Japan ships the highest percentage of deadweight tonnage, 30% of the world’s total shipping ability. (Wild, 2006) These vessels are shared among other countries that do not own their own cargo ships. So every country can get their products to who ever wants them.

Western Europe influences international trade patterns and world output. They have bigger merchandise trade with most countries then any other nation. By far Western Europe is out leading the way of international trade.

If all trade was to stop between every country in the world we would have to learn to get along without some products. Here in the US we would have to try and get along with out as much fuel oil as we are accustomed to using. Though we have our own refineries here, they just don’t produce enough to keep us as we are. The prices would go up dramatically and people would not be happy.

Other products we would have to learn to trim our usage of would be seafood, electronics, paper, wood, and wine, just to name a few.