Pattern of Trade

What Is the Pattern of Trade?

The pattern of trade refers to the changing composition and direction of a country's exports and imports.

It shows what goods and services are traded and with which countries.

Factors Influencing the Pattern of Trade

• Comparative advantage: Countries will specialise in producing goods and services in which they have a comparative advantage, leading to changes in the pattern of trade. For example, the UK no longer has a comparative advantage in manufacturing, leading to a decline in exports of manufactured goods and an increase in imports of manufactured goods.
• Impact of emerging economies: The rise of emerging economies, such as China and India, has shifted global trade patterns, increasing their share of exports and imports.
• Trade blocs and bilateral trade agreements: Membership in trade blocs or the establishment of bilateral trade agreements can influence the pattern of trade by reducing barriers and promoting trade between member countries. For example, the UK's exit from the EU has led to a reduction in trade with EU countries and an increase in trade with non-EU countries.
• Relative exchange rates: Fluctuations in exchange rates can affect the competitiveness of a country's exports and imports, influencing the pattern of trade. For example, a depreciation of the pound can make UK exports cheaper and more competitive, leading to an increase in exports and a decrease in imports.