International Trade & World Output

The gross amount of product used globally is referred to as the world output. International trade is the exchange of securities or commodities from one country to another.  “Countries with higher income account for about sixty percent of the World’s merchandise trade, while trade between high income and low and middle income countries accounts for nearly thirty four percent of the world merchandise trade” (Motley, 2005). Studies have shown that economies that embrace open trade have, on average, outperformed closed trade economies.

The amount of world output directly influences how much international trade there is. The more that the world’s economic output increases, the more the amount of international trade increases and vice versa. The rate at which International trade grows tends to be greater than that of world output. “Since 1948, world trade has consistently grown faster than world output” (World Trade Organization, n.d.). It is thought that this trend is due to trading good becoming more inexpensive over time.

International trading patterns become broader and broader as time passes.  The most significant amount of trading is done between the combination of high income and middle income countries paired with high income and low income countries. There is a lesser but still substantial amount of trade done between middle and low income countries. Knowing how much trading is going on, especially in poorer countries, helps us to determine which developing counties have and emerging economic market place.  The more interdependent a country is, the easier it is for them to specialize in their own competitive areas. This provides the citizens of the country with more job opportunities and higher profit potential.

If trade seized to exist as we know it, the world would feel a crippling affect and cause illiquidity. As Americans, we could say goodbye to things like coffee, tropical fruits, Italian leather, German lager and Swiss chocolates. We would no longer have Lexus, Ferrari, Jaguar or numerous other foreign automobiles.  

Americans would also not be able to maintain the supply needed to meet the demands of the consumer for petroleum and gas. We would have to release current reserves to starve off short term needs. Without the ability for America in import oil, we would be unable to keep oil prices at an economically viable price. We would be unable to run cars. With the majority of Americans living in the suburbs, access to work will become more difficult, impossible for some.  The economy would be pushed to the brink of collapse with the reduction in air traffic and trucking industry due to a lack of oil.  

20.1 % of are exporting is done to Canada (Economy Watch, n.d.). Without our imports, Canada wouldn’t be able to obtain a lot of the things they import most from the United States as easily. These are products such as trucks, automobiles, aircrafts, spacecrafts, natural gas, crude oil and petroleum excluding light oils (Workman, 2010).  It is convenient for Canada to import products from the U.S. because of how close we are.

On the other hand, if you were to look at the imports of a country like China, the products would be different. China is a major importer of American goods. If we decided to no longer export to China, they wouldn’t be able to obtain our semi-conductors, civilian aircrafts, industrial machines, computer accessories, and steel making material. They would also no longer be receiving soybeans, plastics, raw cotton, copper and aluminum (Workman, 2007).

Globalization has lead to a vast number of countries becoming interdependent upon imports and exports. Without the international trade system, even the world’s economically soundest countries would be debilitated. The U.S. would be unable to obtain many of the items that they currently take for granted. Choices would become limited or nonexistent. Low income countries would be striped of income. International trade is beneficial for all involved and we should feel fortunate to be part of a country that supports it.

Motley, L. (2005, December 9). International Trade: What Is It Really?. Retrieved from http://www.associatedcontent.com/article/15777/international_trade_what_is_it_really_pg2.html?cat=3.

Perry, M. (2011, April 22). The Global Economy’s Remarkable Recovery: World Trade and Output Reach New Record Levels in February. Retrieved from http://blog.american.com/2011/04/the-global-economy%e2%80%99s-remarkable-recovery-world-trade-and-output-reach-new-record-levels-in-february/.

Workman, D. (2010, August 5). Cananda’s Top Imports and Exports with US So Far in 2010. Retrieved from http://www.suite101.com/content/canadas-top-imports-and-exports-with-us-so-far-in-2010-a270542.

Workman, D. (2007, June 28). Top Chinese Exports & Imports.  Retrieved from http://www.suite101.com/content/top-chinese-exports-imports-a24920.

World Trade Organization. (n.d.). Growth, jobs, development and better international relations: how trade and the multilateral trading stsyens help. Retrieved from http://www.wto.org/english/thewto_e/minist_e/min99_e/english/book_e/stak_e_3.htm.