Interconnections Through Trade, Finance, and Migration
- Imagine a world where countries operate in isolation, producing everything they need without interacting with others.
- Now, compare this to our interconnected global economy, where goods, services, money, and people flow across borders every second.
This interconnectedness shapes economies, influences policies, and impacts lives worldwide.
Trade Flows: The Movement of Goods and Services
Raw Materials, Fuels, Agricultural Products, Manufactured Goods, and Services
- Raw Materials: These are the building blocks of global trade including ores and metals.
- Fuels: Key export products for multiple countries strengthening their role.
- Agricultural Products: Significant components of global food security.
- Manufactured Goods: Countries like China, Germany, and South Korea are major exporters of electronics, automobiles, and machinery. Manufactured goods are main export products from most of the HICs.
- Services: The global trade in services, such as finance, tourism, and information technology, is growing rapidly.
What Is the Volume and Pattern of Trade?
- Globally export of goods reaches 20-25 trillion USD annually and accounts for approximately 80% of the value of international trade.
- The remaining 20% (~5-7 trillion USD) is constituted by export of services.
- When studying trade flows, consider both the origin and destination of goods and services. This helps identify patterns and dependencies in the global economy.
- Please note there is a distinctive pattern of trade.
Why Trade Matters
- Economic Growth: Trade enables countries to specialize in what they do best, creating jobs and boosting productivity and income.
- Interdependence: Countries become reliant on each other, fostering cooperation but also creating vulnerabilities.
- Access to Resources: Trade ensures access to resources that may not be available domestically.
- Market Expansion and Diffusion: Trade allows for spreading out products, but also information and culture.
Think of the global economy as a web, with each country as a node. Trade flows are the threads connecting these nodes, creating a network of interdependence.
Foreign Direct Investments (FDI): Market Expansion and Job Creation
Definition
Foreign Direct Investments (FDI)
Foreign Direct Investments (FDI) refers to investments made by a company or individual in one country into business interests located in another country.
