Pattern of Trade (Edexcel A Level Economics A)

Revision Note

Steve Vorster

Written by: Steve Vorster

Reviewed by: Jenna Quinn

Factors Influencing the Pattern of Trade

  • Numerous factors influence the pattern of trade between countries

    • Patterns of trade can change significantly over time e.g. up to the 1980s the UK traded predominantly with Commonwealth Countries. In 2020, 46% of trade was with EU countries and 26% was with the USA

  1. Comparative advantage:  this is less a grand plan and more a natural market outcome as firms seek to profit maximise. Where it makes sense to increase production due to natural advantages, firms do.  When it makes financial sense to outsource production because another country does it better/cheaper, firms do. Over time, this changes what countries produce and trade

  2. Impact of emerging economies:  Emerging world economies like China, Brazil, India and Thailand have obtained a much higher share of the global business which means that other countries are losing out as trading relationships change

  3. Growth of trading blocs and bilateral trading agreements: By December of 2016, the World Trade Organisation (WTO) had helped to facilitate more than 420 regional trading blocs and bilateral agreements (between 2 countries). This results in trade creation and causes trade diversion

  4. Changes in relative exchange rates: If a country's exchange rate appreciates, then its exports are relatively more expensive and its imports become cheaper. This means that changes to the exchange rates influence the patterns of trade over time as goods/services either become cheaper or more expensive in relation to the price of goods/services in other countries.

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Steve Vorster

Author: Steve Vorster

Expertise: Economics & Business Subject Lead

Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.

Jenna Quinn

Author: Jenna Quinn

Expertise: Head of New Subjects

Jenna studied at Cardiff University before training to become a science teacher at the University of Bath specialising in Biology (although she loves teaching all three sciences at GCSE level!). Teaching is her passion, and with 10 years experience teaching across a wide range of specifications – from GCSE and A Level Biology in the UK to IGCSE and IB Biology internationally – she knows what is required to pass those Biology exams.