World Trade Essay example

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Traditional and most developed form of international relationships is world trade. World trade is around 80 percent of all international economical relationships. International trade is a form of communications between manufactures of different countries that comes out as a result of world labor division, and express mutual economic dependence. Wild, in his book gives us a definition of world trade as: "The purchase, sale, or exchange of goods and services across national borders induced by sellers, buyers and intermediary in different countries." International trade includes import and export of goods and services; ratio between them is called trade balance. According to international trade theory of David Ricardo, every country should…show more content…
Another example for decrease of supply would be countries that produce wheat. In particular years, wheat harvest is not so good, due to weather conditions, which decreases world wheat output. International wheat trade between countries also decreases. Supply and demand factors are not the only world output factors that affect international trade. Another factor is money value factor. If a country is in recession due to political or economic reasons, its currency value gets weakened in world market. This makes imports for this country more expensive. Therefore, imports of the country decrease. This affects in trading balance, and world trade. The exact pattern of international trade is practically impossible to determine. One of the biggest reasons for that is underground trade in economies, or so called "black market". The second reason for that is because governments of some countries choose to distort some goods products or materials that cross borders. Example would be armor and ammunition, other military equipment, vehicles and other goods. But some agencies that are available in most countries provide us with broad data that can give us a picture of broad patterns of world trade. Several models were used to determine patterns of international trade. One of them, model of David Ricardo, so called "Ricardian model" ahs been discussed already earlier. It emphasizes on comparative advantage of each country in producing a

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