PATTERNS IN INTERNATIONAL TRADE

GROUP 10
Submitted to: Dr. Mohan Monterio Submitted by: VARSHA SENGUPTA VEENA U VIMAL S VINAY PRAKASH VISHAK R YASWANTH M

12115 12116 12117 12118 12119 12120

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Introduction

International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of Gross Domestic Product(GDP). Industrialization,advanced transportation, globalization, multination al corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders.
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Countries under study

The countries which we have taken for study include: Developed countries: USA, Norway, Japan

Developing countries: India, China

Under-developed countries: Nepal

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1991
Distinct trade groups: The G7 countries(Developed countries) Canada, France, Germany, Italy, Japan, U.K. and the U.S.

The O5(Emerging economies) countries Brazil, China, India, Mexico and South Africa. The Soviet republics formed distinct clusters of countries.
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2001

The trading patterns of the G7 and O5 had essentially merged. In contrast, the former Soviet republics had moved away from these other two groups and had become more similar to each other in terms of trading patterns.

United States of America(USA)

The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be over $15 trillion in 2011,approximately a quarter of nominal global GDP. Its GDP at purchasing power parity is the largest in the world, approximately a fifth of global GDP at purchasing power parity. The U.S. economy also maintains a very high level of output. The U.S. is one of the world's wealthiest nations with per capita GDP of $48,450, the 7th highest in the world. The U.S. is the largest trading nation in the world. Its four largest export trading partners are as of 2010: Canada, Mexico, China, and Japan.
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USA Trade data for 2012

Exports increased to $185.0 billion in June from $183.3 billion in May (revised). Goods were $132.8 billion in June, up from $130.9 in May. Services were $52.2 billion in June, down from $52.4 billion in May.

Imports decreased to $227.9 billion in June from $231.4 billion in May (revised). Goods were $190.3 billion in June, down from $193.9 billion in May. Services were $37.6 billion in June, up from $37.5 billion in May.
For goods, the deficit was $57.5 billion in June, down from $62.9 billion in May. For services, the surplus was $14.6 billion in June, down from $14.9 billion in May. It is interesting to note as well that the United States is a leader in oil producing nations but is not a leader in oil exportation. This is caused by the USs incredible oil use, which causes a staggering deficit for the oil trade annually.
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Trade Commodities in the USA

Two-thirds of U.S. exports are material goods. The largest sub-category (25%) is capital equipment, such as computer equipment, semiconductors and medical equipment. The second largest (20%) is industrial machinery and equipment, including plastics, chemicals and petroleum products. Only 5% of exports are automotive, while 6% is food and beverages. Despite being such a large exporter, the U.S. exports less than it imports. The U.S. imports more than it exports. As a result, it's the world's largest importer. More than 80% of U.S. imports are goods. The largest category ($756.6 billion in 2011) is industrial machinery and equipment, which includes plastics and chemicals. Within this, the largest category is oil and related petroleum products. In 2011, the U.S. imported $439.3 billion of petroleum products, the highest level since 2008.

Foreign Direct Investment in the United States and U.S. Direct Investment Abroad, Annual Flows, 1990-2007 (in billions of $)

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NORWAY

Norway's trade has been mostly with the EU, a trend that has continued to increase. Norways GDP per capita was 64,600 in 2008, which makes it the second highest in the European Economic Area (EEA) after Luxembourg. In 2008, Norway emerged as the EUs most valuable import partner for trade in good totalling at 91.85 billion. Norways trade with the EU indicates a surplus of 48.27 billion. Further, the European Economic Area (EEA) Agreement will be essential for safeguarding the Norwegian market interests in the huge European market. Norways traditional economic activities include fisheries, fish farming and shipping. Norways exports tripled between the years 1974 and 1981, mostly because of the solid performance of its petroleum sector.
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Norway Trade: Exports Commodities

Oil and gas Shipping Wood products Industrial machinery Transport equipment Hydroelectricity Fish farming Food processing Seafood Timber Forests Chemicals Metals, particularly semi-finished steels, ferro-alloys and aluminium Unwrought metals Construction and operation of massive offshore installations and technology industry Other mineral resources of Norway are copper, lead iron ore, zinc, nickel, titanium, pyrites, and nickel.

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Norway Trade: Imports Commodities

Capital goods Fuels Industrial supplies Machinery Transportation Food items Metals Chemicals Norways main trading partners are UK, Netherlands, Germany, Sweden, US, France, and Denmark. Norways exported services totalled to 31.1 billion whereas the countrys imports totalled to 29.6 billion.
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Share of Imports & Exports

Share of Norways import of goods 2011

Share of Norways export of goods 2011

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JAPAN

Japan is a major economic power in the world. Economic growth has raised the standard of living of the Japanese people to that of the United States and higher. Income is more evenly distributed in Japan than in the United States. Like the United States, Japan's economy has moved from manufacturing towards services. Its companies have successfully used the countries of Southeast Asia as pools of low cost labour. The change to a more service economy also shows changing tastes of Japanese consumers.
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EXPORTS & IMPORTS - JAPAN

The Japanese economy is one of the third largest in the world. Only the USA and China have a higher GNP (Gross National Product). The Japanese currency is the Yen Exports: Japan's main export goods are cars, electronic devices and computers. Most important trade partners are China and the USA, followed by South Korea, Taiwan, Hong Kong, Singapore, Thailand and Germany. Imports: Japan has a surplus in its export/import balance. The most important import goods are raw materials such as oil, foodstuffs and wood. Major supplier is China, followed by the USA, Australia, Saudi Arabia, South Korea, Indonesia and the United Arab Emirates. Industries: Manufacturing, construction, distribution, real estate, services, and communication are Japan's major industries today. Agriculture makes up only about two per cent of the GNP. Most important agricultural product is rice. Resources of raw materials are very limited and the mining industry rather small.
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JAPAN BALANCE OF TRADE

Japan reported a trade surplus equivalent to 62 Million JPY in June of 2012. Historically, from 1979 until 2012, Japan Balance of Trade averaged 649.0 Billion JPY reaching an all time high of 1608.7 Billion JPY in September of 2007 and a record low of -1476.9 Billion JPY in January of 2012. Exports have been the main engine of Japan's economic growth in the past six years.

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Imports & Exports of Japan

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INDIA

Prior to the 1991 economic liberalisation, India was a closed economy due to average tariffs exceeding 200 percent and the extensive quantitative restrictions on imports. Foreign investment was strictly restricted to only allow Indian ownership of businesses. Since the liberalisation, India's economy has mainly improved due to increased foreign trade. Imports: Indian imports were worth 35371 Million USD in June of 2012. Historically, from 1994 until 2012, India Imports averaged 12033.5 Million USD reaching an all time high of 45282.0 Million USD in May of 2011 and a record low of 1924.0 Million USD in May of 1994. India is poor in oil resources and is currently heavily dependent on coal and foreign oil imports for its energy needs. Other imported products are: machinery, gems, fertilizers and chemicals. Main import partners are European Union, Saudi Arabia and United States.

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EXPORTS OF INDIA

India exports were worth 25067 Million USD in June of 2012. Historically, from 1994 until 2012, India Exports averaged 8350.1 Million USD reaching an all time high of 30418.0 Million USD in March of 2011 and a record low of 1805.0 Million USD in May of 1994. Exports amount to 22% of Indias GDP. Gems and jewellery constitute the single largest export item, accounting for 16% of exports. India is also leading exporter of textile goods, engineering goods, chemicals, leather manufactures and services. Indias main export partners are European Union, United States, United Arab Emirates and China 20

Imports & Exports of India

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Foreign Direct Investment(FDI) in India

Starting from a baseline of less than $1 billion in 1990, a recent UNCTAD survey projected India as the second most important FDI destination (after China) for transnational corporations during 20102012. The sectors which attracted higher inflows were services, telecommunication, construction activities and computer software and hardware. Mauritius, Singapore, the US and the UK were among the leading sources of FDI.

According to Ernst and Young, foreign direct investment in India in 2010 was $44.8 billion, and in 2011 experienced an increase of 13% to $50.8 billion. India has seen an eightfold increase in its FDI in March 2012

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FOREIGN DIRECT INVESTMENT IN INDIA

FDI in India over the years:

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CHINA

International trade has been used to bring in new equipment and technologies and to meet scarcities in the domestic economy since China has sought to modernize its economy.

Exports have been used as a means of producing foreign earnings to pay for the imports. The state has sought to maintain an even balance of trade so that the country can pay for imports rather than buying on credit.
With 1.2 billion people and the world's fastest growing major economy, China is hailed as potentially the market of all markets, which has helped to attract investments from around the world at such a magnitude that China is now the second largest recipient of foreign capital (next only to the United States).
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CHINA - IMPORTS

China imports were worth 151.8 Billion USD in July of 2012. Historically, from 1990 until 2012, China Imports averaged 42.4 Billion USD reaching an all time high of 162.4 Billion USD in May of 2012 and a record low of 2.6 Billion USD in January of 1990.

China imports mainly commodities:

Iron and steel, oil and mineral fuels as well as machinery and equipment, plastics, optical and medical equipment and organic chemicals.

Chinas main imports partners are: Japan, European Union, South Korea, Taiwan and ASEAN countries.
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CHINA - EXPORTS

China exports were worth 176.9 Billion USD in July of 2012. Historically, from 1990 until 2012, China Exports averaged 48.8 Billion USD reaching an all time high of 181.1 Billion USD in May of 2012 and a record low of 2.8 Billion USD in January of 1990. Export growth has continued to be a major component supporting China's rapid economic growth. Exports of goods and services constitute 39.7% of its GDP. China major exports are: Office machines & data processing equipment, telecommunications equipment, electrical machinery and apparel & clothing. Chinas largest export markets are European Union, United States, Hong Kong, Japan and South Korea
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Trade (expressed in billions of US$): China

YEAR 1975 1980 EXPORTS 7.689 18.099 27.350 62.091 148.797 183.589 IMPORTS 7.926 19.941 42.252 53.345 129.113 140.305

1985
1990 1995 1998

SOURCE: International Monetary Fund. International Financial Statistics Yearbook 1999

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China - Commodities in 2011

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NEPAL

An isolated, agrarian society until the mid-20th century, Nepal entered the modern era in 1951 without schools, hospitals, roads, telecommunications, electric power, industry, or civil service. The country has, however, made progress toward sustainable economic growth since the 1950s and is committed to a program of economic liberalization. Nepal has used a series of five-year plans in an attempt to make progress in economic development. It completed its ninth economic development plan in 2002; its currency has been made convertible, and 17 state enterprises have been privatized. Foreign aid accounts for more than half of the development budget. Government priorities over the years have been the development of transportation and communication facilities, agriculture, and industry.
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NEPAL

Agriculture remains Nepal's principal economic activity, employing 80% of the population and providing 37% of GDP. Only about 20% of the total area is cultivable. Rice and wheat are the main food crops. The lowland Terai region produces an agricultural surplus, part of which supplies the fooddeficient hill areas. The export-oriented carpet and garment industries have grown rapidly in recent years and together now account for approximately 70% of merchandise exports.
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Nepal Exports, Imports & Balance of Trade

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Comparison of Imports across Countries

Comparison of the 6 countries under study Imports:
import(million usd)
250000

200000

150000 import(million usd) 100000

50000

0 india china japan united states norway nepal

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Comparison of Exports across Countries

Comparison of the 6 countries under study Exports:
export(million usd)
200000

180000
160000 140000 120000 100000 80000 60000 40000 20000

export(million usd)

0
india china japan united states norway nepal

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Comparison of Balance of Trade

balance of trade
30000

20000

10000

0 india -10000 china japan united states norway nepal balance of trade

-20000

-30000

-40000

-50000

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Example of Trade Pattern Crude Oil

Crude oil is perhaps the most researched industry of primary product. Oil production is a pretty straight forward industry, meaning countries either have it or they do not. It makes the countries to be either exporters or importers of crude oil and much revenue in the trade worldwide is from the crude oil.
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Study Conclusions - Exports

Two major exports happen in Manufacturing and Services sector. Countries like China export more of manufacturing goods whereas India exports more in the services sector.

Exporting oil is a very profitable market for those selected countries that have the natural oil resources.
The market in generally spread out with the top ten exporting nations averaging 4-7% of the total market share or 13.5 billion dollars a year. Saudi Arabia is typically the top exporter followed by Russia, Norway, Iran, and the UAE, which all compete for the next top spots.
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WTA

Total Value of Oil Exports to the World in millions and as a percentage 2000 2001 4.00 7.42 2.93 4.56 4.61 4.67 4.86 2.26 2.33 2.83 5.94 21436 44479 13154 20261 22054 18884 21766 11551 12817 11702 30282 4.34 9.01 2.67 4.11 4.47 3.83 4.41 2.34 2.60 2.37 6.14 2002 20909 49461 15073 23151 18199 17271 20139 9964 12201 8850 28706 4.32 10.21 3.11 4.78 3.76 3.57 4.16 2.06 2.52 1.83 5.93 2003 22964 64783 19630 28115 25484 24069 20121 13579 14132 8300 32359 3.84 10.84 3.29 4.71 4.26 4.03 3.37 2.27 2.37 1.39 5.42

UK Fm USSR Mexico Iran UAE Nigeria Venezuela Libya Netherlands Iraq Norway

22894 42502 16789 26099 26428 26719 27860 12968 13354 16214 34025

Algeria
Canada Saudi Arabia Russia Kuwait USA

13271
18051 75839 33448 17073 10464

2.32
3.15 13.24 5.84 2.98 1.83

10426
15933 68479 34952 13314 9420

2.11
3.23 13.88 7.08 2.70 1.91

10571
17383 55162 39666 13354 8981

2.18
3.59 11.39 8.19 2.76 1.85

14448
22247 70181 50791 15894 10818

2.42
3.72 11.75 8.50 2.66 1.81

Other

24.22

22.82

23.79

23.37
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Study Conclusions Oil Imports

Importing oil is a necessary trade for every industrialized nation, except for the petroleum rich nations. China, even though it is a developing country, has a Trade surplus, i.e. its Exports are more than imports. Over the last 5 years, the United States has been followed by Japan, China, Germany, France, India, the Netherlands, and the United Kingdom in differing order.
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Conclusion

International Trade has remained relatively consistent over the past decade. Oil and gasoline have been consistently important to industrialized nations for the past decade, but the future might hold more interesting trade patterns. The rise of alternative energy sources and alleviation of environmentally harming products could cause a sudden decline in the worlds demand. This would have an incredible effect on the countries that solely depend on oil as revenue The future trade patterns of oil seem to be a good deal more unstable than in the past decade.
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References & Bibliography:

Web references:

http://www.wto.org/ http://www.tradingeconomics.com/ http://www.nationsencyclopedia.com/economies http://en.wikipedia.org/ http://www.un.org/en/

Bibliography:

International Business by Charles W Hill and Arun Kumar Jain Development, Trade and WTO by Bernard Hoekman and Philip English, Washington D.C.
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