In-depth summary covering the knowledge required under the OCR A level economics specification. Includes a number of analysis and evaluative points to assist students with essay-based questions.
Pattern of Trade: the mix of goods and services that a country imports and exports in
international trade. This reflects the specialisation and comparative advantage that a country
has in producing certain products. While some countries have a highly diversified export
base and can produce a wide range of products, others are heavily reliant on a narrow base
of exports or may be reliant on trade with only a few countries.
Trends in International Trade:
● Countries such as the USA, Brazil and India have a low level of dependence on
international trade due to their large and diverse economies, however this may also
be a reflection on attempts to limit reliance on external trade.
● Countries such as Malaysia and Thailand have followed policies that promote exports
believing that this will allow for more rapid economic growth.
● Moves towards closer integration between countries has strongly affected the pattern
of world trade, for example European integration made Western Europe a major
player in world trade, with 40% of the world’s exports heading to Western Europe in
2017.
● The expansion of the EU and the Single European Market has altered the pattern of
trade with member countries becoming more likely to trade with each other because
of falling transaction costs when markets are deregulated.
● Given its population size, Africa shows very little involvement in world trade.
● When the Commonwealth was still thriving, about 30% of the UK’s exports went to
other European countries but with the UK becoming a member of the EU in the
1970s, their exports to the EU rose reaching 60% by 1990.
, Advantages and Disadvantages of International Trade:
Advantages Disadvantages
Developed -Access to raw materials which -As countries become more closely
are not within their own integrated, they may become more
boundaries, particularly susceptible to external shocks - e.f. The
important in the early stages of financial crisis of 2008 which spread
growth to feed the rapidly between countries.
manufacturing sector -Especially estonia which had a
-Widens consumer choice giving depressed economy for 5 years after the
access to new commodities 2008 financial crisis
which couldn’t be produced in
the domestic market
-Firms may be able to gain
technical knowledge from global
markets enabling increases in
productive efficiency
Emerging -Engaging with international -Risk creating vulnerability due to heavy
trade helped accelerate the export dependence - slowdowns in world
process of development as it trade significantly affect the economy.
provides a large market for
products to exploit economies of
scale from.
-International markets provide
capital goods and technical
expertise which helps the
economy develop a
manufacturing base
Developing -Have the potential to gain much -Firms are unable to grow to the size
from international trade however needed to exploit economies of scale as
benefits are not always accrued people live on low incomes and the home
in reality. market is relatively small. This means
-Creates jobs and raises per they can be outcompeted on an
capita incomes - acts as an international stage. Instead they may opt
injection of demand into the for rapid industrialisation aided by import
circular flow creating a positive protectionism before they eventually
export multiplier and accelerator open up.
effects. -Developing countries lack the expertise
-export revenue helps pay for to build capital goods or take advantage
essential imports of capital of technical advances.
equipment/ technology -Their economies tend to be dominated
by primary production such as agriculture
which is notoriously volatile and liable to
fall over time in relation to the prices of
manufactured goods meaning it is
difficult for developing countries to tap
into potential gains from trade.
-Many suffer from the natural resource
curse if they overly specialise- making
them poorer in the long run.
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