Essay on Trade system

2257 Words 10 Pages
Contents
Introduction to International Trade 3
History and Evololution of International Trade 3
Trends in International Trade 3
Theories of International Trade 5
Absolute Advantage by Adam Smith 5
Comparative Advantage by David Ricardo 6
Gravity Model by Tinbergen 7
Benefits form trade for the poorest of nations 8
Conclusion and Recommendations 9
Bibliography 10

Introduction to International Trade
International trade is an activity wherein there is an exchange of goods, services, and capital for a consideration that happens across the national borders of a nation. Thus, the two parties which undertake such an activity ate called importer (the one who is buying) and an exporter (the one who is selling). This usually represents a
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Finally in the 20th century we started having Free Trade Areas (FTA) and Preferential Trade Areas (PTA) like that of EU, NAFTA, ASEAN and more.

Trends in International Trade
The quantum of international trade in the year 2012 was estimated at 17.3 trillion US$ for merchandises and US$ 4.25 trillion for services sector making a total of 21.55 trillion US$ of international trade happening in the year. With respect to the merchandise trade, the top 10 nations have a 51% stake in this trade with the stake of the developing nations being at 42% in the year 2012. On the other hand in case of services exports, the top 10 nations have a stake of 49% with the developing nations having 35% stake.
In terms of merchandises the biggest contributor is that of NAFTA with US$ 2.371 trillion followed by EU with US$ 2.167 trillion with their combined weight of almost a quarter of the world trade. ASEAN too has US$ 1.253 trillion worth of trade in merchandises. The leading traders in merchandises are the US followed by China, followed by Germany then japan and finally France to make the top 5. For services exports, the top five are US, UK, Germany, France and China being closely followed by japan and India.
At present it is the developed nations which

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