IGNOU : M.COM : IBO 1 : UNIT 9 : Q - 1.There is a view that the future of world trade is going to be one of trade among trade blocs rather than trade among nations. Do you agree with this view? Give reasons for your answer.

 

Ans.  As far as direction of global merchandise trade of different groups of countries is concerned, it will be noticed from Annexure 8, that there is very heavy intra-regional trade in Western Europe followed by Asia and North America. The high share of intra-trade in total trade in West Europe is attributed to the European Union: in Asia, apart from the existence of ASEAN, the large trade of Japan, Australia and New Zealand within the region explains the substantial share of intra-trade; notwithstanding the existence of regional groupings in Latin America, the share of intra- trade in this region is not substantial, while the impact of NAFTA, to some extent at least, is, perhaps, visible in the increase in the share of intra trade in North America's global trade; the share of intra-trade in total trade has, understandably, dropped significantly in the Eastern European region consequent to the breaking up of former USSR. Recently the share has increased from 19% in 1995 to 31% in 1998. Perhaps one finding could be that regional trade blocs have succeeded, as far us stepping up intra-trade is concerned, more among developed countries than among developing countries.

To sum up, though developed countries in Western Europe, and North America, besides Japan in Asia, continue to be the leading trading nations of the world, some countries in developing world, particularly in East Asia, and People's Republic of China are slowly emerging as world's lending trading nations, though in terms of the current value of exports, they are still to go a long way to catch up with countries in the developed world. There is also clear evidence of substantial intra-trade in various regions of the world, Particularly in Western Europe. Manufactures have turned out to be the most dynamic items traded internationally.