Volume and Direction of International Trade

In 1990, the world reached a milestone when the volume of international trade in goods and services measured in current dollars surpassed $4 trillion. By 2012, the volume of exports of goods and services was more than four times the 1990 levels, approaching $19 trillion. The dollar value of total world trade in 2012 was greater than the gross na¬tional product of every nation in the world including the United States. Another measure of the significance of world trade is that one fourth of everything grown or made in the world is now exported.

The rapid increase in the growth of world trade after World War II can be traced to in¬creased consumption of goods and services as more people joined the middle class in many countries of the world. Trade liberalization, at both the regional and the international level, has created a global environment that is conducive to the growth and expansion of world trade. New technologies such as computers, telecommunications, and other media also assisted in the physical integration of world markets.

Small countries tend to be more dependent on international trade than larger ones be¬cause they are less able to produce all that they need. Larger countries (in terms of popula¬tion) import fewer manufactured goods on a per capita basis because such countries tend to have a diversified economy that enables them to produce most of their own needs. This is exemplified by the case of the United States, Japan, India, and China, which have low import propensities compared to countries such as Belgium or the Netherlands.

Merchandise trade currently accounts for about four fifths of world trade. The top 10 ex¬porters accounted for just over one half of world merchandise exports (China, United States, Germany, Japan, Netherlands, France, South Korea, Italy, Russia, and Belgium) (Table 1.3). Merchandise trade includes three major sectors: agriculture, mining, and manufactures. Trade in manufactured goods has been the most dynamic component of world merchandise trade. In 2012, the value of world merchandise exports was estimated at $18 trillion (U.S.) compared to that of $4 trillion (U.S.) for services (WTO, 2013).

Industrial market economies account for the largest part of world trade. Trade among these countries is estimated to be approximately 52 percent of global merchandise trade. Over the past few decades, one observes shifting patterns of trade as evidenced by a steady growth in the role of developing countries especially that of emerging economies and i ncreasing levels of trade among developing nations.

Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.