Short Questions Chapter 1

Please write the answers of following short questions with appropriate examples:

Intra-regional trade is more in case of developed countries as compared to developing countries ■

North America 40% ■ Western Europe 67% ■ Eastern Europe 26% ■ Asia 49% ■ Africa 8% ■
Middle East 7%

1. Differentiate between Intra-Industry and Inter-Industry trade?

Intra-industry trade refers to the exchange of similar products within the same industry
between countries. Inter-industry trade is the more traditional concept, where
countries export goods from industries where they have a comparative advantage and
import goods from industries where they don't.
2. What is the difference between Intra-Industry and Intra-Country trade
Intra-industry trade is international trade, specifically the exchange of similar
products belonging to the same industry between countries. Intra-country trade is
domestic trade, referring to the exchange of goods and services within the borders of a
single country.

3. Which countries capture highest share in the world trade?

Reliable sources like the World Trade Organization (WTO) publish reports that detail
global trade statistics, including leaderboards for top trading countries. Here's some
information to get you started:
 According to the WTO, China has been the world's largest exporter of goods
since 2009, accounting for around 14% of global exports in 2022.
 Other major players include the United States and Germany, though their share is
lower than China's.
4. What is Intra-Regional Trade? Which Continent possesses highest Intra-regional
trade in the world?
Intra-regional trade refers to the buying and selling of goods and services within a
specific geographic region. Asia is generally considered the continent with the highest
level of intra-regional trade(western eu and north america)
5. Which sector capture highest share in the world trade?
 When it comes to the world trade landscape, the answer depends on whether we're
looking at trade in goods or trade in services:

 Goods: The manufacturing sector captures the highest share in world trade of goods.
This sector encompasses a wide range of industries, from machinery and electronics to
chemicals and textiles. Estimates suggest the industry sector accounts for around 70%
of the total value of global merchandise trade.

 Services: The picture changes when we look at trade in services. Here, the computer
and information services sector has been the most dynamic in recent years. This
includes things like software development, data processing, and telecommunication
services. The rise of digital delivery and remote work has significantly boosted this
sector, with digitally delivered services accounting for over 50% of global services
exports in 2022.

6. How increase in exports can contribute in the economic growth of an economy?

7. Write few examples of services sector?
8. Which one of the sectors contributes highly in the economies of developed
countries?

The services sector contributes the most to the economies of developed countries.
This sector encompasses a wide range of industries that provide intangible goods and
services, such as finance, healthcare, education, technology, retail, and hospitality.

In contrast, the agriculture and industry sectors tend to play a lesser role in developed
economies, although they remain important. Here's a breakdown of the typical
contribution:

 Services: Around 75% of GDP (Gross Domestic Product)

 Industry: Around 20% of GDP
 Agriculture: Around 5% of GDP

9. Which countries are the major exporters of services in the world?

The major exporters of services in the world are:

1. United States
2. United Kingdom
3. Germany
4. China
 These countries hold a dominant position in the global services export market. Here's a
bit more detail:

10. Do you think that relative importance of trade has increased over the time and
individual countries are getting benefits from trade, however, their benefits depend
on the economic development of the world as a whole?

Yes, the relative importance of trade has definitely increased over time. Here's why:

 Trade Growth Outpaces GDP: The value of global trade has grown significantly faster
than global economic output (GDP) over the past century. This means trade is playing a
bigger role in the overall economy.
 Globalization: Advancements in transportation, communication, and technology have
made international trade cheaper and easier. This has led to deeper economic
interconnectedness between countries.
 Specialization and Efficiency: Countries can specialize in producing goods and
services they are most efficient at and then trade for what they lack. This leads to a
wider variety of goods and potentially lower prices for consumers.

Now, regarding benefits:

 Individual countries generally benefit from trade, but the extent depends on their
development level:
o Developed countries often have a competitive advantage in exporting manufactured
goods and services. Trade can lead to economic growth, job creation, and access to a
wider variety of goods for consumers.
o Developing countries can benefit by exporting raw materials or labor-intensive goods.
Trade can help them industrialize, attract foreign investment, and improve living
standards. However, they may face challenges like unequal bargaining power or
competition from established exporters.

So, yes, individual countries benefit from trade, but their success depends on the
overall health of the global economy. Here's why:

 Global Recession: A recession in one country can ripple through the global trading
system, reducing demand for exports from other countries.
 Trade Policies: Protectionist trade policies like tariffs and quotas can limit the benefits
of trade for all countries.
 Infrastructure and Development: Developing countries may need investments in
infrastructure and education to fully participate in the global trading system.

Overall, trade is a powerful driver of economic growth, but its benefits are not evenly
distributed, and a healthy global economy is crucial for everyone to win.