Generally speaking, the paper "How the Composition of International Trade Has Changed since the 1960s" is a great example of business coursework. International trade has been growing rapidly over recent years. The level of growth has however been different for different countries and different regions. During the 1950s and 1960s Bretton Woods era of liberalisation of trade and relatively closed capital markets, total flows of capital averaged about five percent of the gross domestic product (GDP) in the advanced capitalist democracies, and by the end of the 1970s, total capital movements had increased to 20 percent of the GDP.
Further, by the 1990s, transborder movements of capital exceeded on average 50 percent of GDP. It is also notable that imports and exports of goods and services have increased relative to GDP, but the growth in trade openness has been much slower than the expansion of mobility of capital. Average openness of trade in the advanced market economies increased roughly from 48 percent of GDP in the mid-1960s to about 65 percent in the mid-1990s. Importantly, trends for other measures of flows between South and North of the globe exhibit even less growth (Swank, 2002, p.
17). Cognisant of the fact that trends in international trade have not been uniform across the world, this paper seeks to discuss how the situation has been since the 1960s. Changes in the composition of a trend since the 1960s are therefore highlighted. To understand these changes, the paper illustrates the trends in particular countries and regions. The paper is structured to provide critical analysis of the trends in international trade since the 1960s, with a focus on how trade between countries and regions has been rising since the 1960s.
However, some regions have not experienced a steady increase in trade; in fact in some regions trade has been on the decline in some years. The analysis is further supported by a discussion on the role structures such as the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organisation (WTO), have played and how they have affected international trade. Historical analysis World trade has increased significantly over the past half-century. According to WTO (noted (a)), since 1950, global trade had increased more than twenty-seven times in terms of volume.
In addition, by way of comparison, the level of world GDP grew about eight times during the same period. Consequently, WTO estimates that the share of international trade in world GDP rose from 5.5 percent in 1950 to 20.5 percent in 2006. Reasons for the tremendous increase in global trade There are a number of reasons for the spectacular increase in international trade. First is technological change, which has lowered the cost of communication and transportation.
WTO notes that in the second half of the 20th century, the introduction of the jet engine and containerisation significantly lowered the cost air and maritime transportation, hence widening the range and volume of goods that are traded. Also related to this is the issue of the information technology revolution, which has made it easier to make transactions and to coordinate the production of parts and components of the final goods in different countries. Another factor is the increase in more open trade and investment policies. According to the WTO (not dated (a)), countries have opened up their trade regimes unilaterally, bilaterally as well as multilaterally.
Hence, measures that initially taxed, restricted or prohibited trade have either been reduced significantly or totally eliminated. Such changes in economic policies have not only enhanced trade, but they have also increased the number of countries participating in global trade expansion. The increase in the number of countries participating in international trade can be judged to be concomitant with the increase in the composition of goods and services being traded. As a result of the increase, developing countries are estimated to account for 36 percent of the world exports, which is about double their share in the early 1960s (WTO, not dated (a)).
But even though the WTO indicates that countries have become more open to international trade, this assertion should be judged with caution as there are views that openness has been much slower than the rate of expansion of capital mobility (Swank, 2002, p. 17). As mentioned earlier, technological innovations and changes in trade and investment policies have been pivotal in the expansion of trade as they have democratised trade and made it easier to “ unbundle” production (WTO, not dated (a)).
Over the years, it has become possible to make components of various goods in different countries and assemble them in another. Many of the manufacturing plants are located in developing countries and this makes them be easily integrated with the global supply chain. This means that today, more countries are involved in production and trade than was the case in the 1960s. Changes in the composition and network of world trade Although the level of international trade has grown tremendously, the pattern has not been uniform across the world.
Some regions have grown and others have declined significantly, thus altering the pattern of world trade too (Webber & Rigby, 1996, p. 47). There are significant gaps between developed and developing countries, and even within the latter – and the gaps are widening steadily. For instance, in 1965 the average gross national product per capita for the top 20 percent of the population of the world was steadily 30 times that of the poorest 20 percent, and 25 years later in 1990, the gap had doubled to 60 times (United Nations Conference on Trade and Development (UNCTAD), 1997).
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