4.1.3 - Pattern of trade

• Factors influencing the pattern of trade:

  • Comparative advantage
  • Emerging economies:
  • Trading blocs and bilateral trading agreements
  • Relative exchange rates
• Comparative advantage is an economic principle that suggests countries should specialize in the production of goods and services in which they have a lower opportunity cost compared to other countries.
• Emerging economies are countries that are in the process of rapid industrialization and experiencing significant economic growth. Examples include China, India, Brazil, and many others.
• Trading blocs are groups of countries that form agreements to promote trade among themselves. Bilateral trading agreements are agreements between two countries to facilitate trade.
• Exchange rates determine the value of one country's currency in terms of another's. They can fluctuate due to various factors, including supply and demand, interest rates, and economic conditions.
• ountries tend to export goods and services in which they have a comparative advantage and import those in which they have a comparative disadvantage. This principle is a fundamental driver of international trade patterns.
• Countries tend to export goods and services in which they have a comparative advantage and import those in which they have a comparative disadvantage. This principle is a fundamental driver of international trade patterns.