World Output and Trade

Essay by shortness84College, UndergraduateA+, October 2007

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The volume of world output influences the volume of international trade. For example, if the level of world economic output increased, then the level of international trade would also increase. Trade will slow in times of recession, especially if the country experiencing economic recession has a weaker currency in relation to other countries. Weaker currency means that imported goods will cost much more than domestic products will. Also, it is consistent for international trade to increase faster than world output. (Wild, Wild, Han, 2006)The goods and services a country trades and with whom it does trade with describes the pattern of trade. The pattern of international trade can be determined by examining the levels of both international trade and world output. Unfortunately, this can sometimes be inaccurate. For example, black market trading can alter the accuracy of trade between different countries. Fortunately, there is the World Trade Organization which helps to regulate and maintain organized trade between countries.

This organization helps free trade, negotiates the opening of more markets and helps to settle any disputes as they apply to trade. The WTO is vital in keeping trade fair and maintaining the regulations and policies between nations.

Dependency of a country on an imported commodity could be vital to that country's economic system. The United States would experience outright chaos if, by chance, other nations discontinued international trade. For example, crude oil or petroleum is imported from countries such as Canada, Saudi Arabia, Venezuela, Nigeria and Mexico. (U.S. Department of Energy, 2007) Lack of petroleum doesn't just mean the United States will be out of fuel for the many cars that travel our highways. Petroleum is actually used for many things, including: all plastic, asphalt for roads, the rubber for tires, artificial fibers in clothing, photographic film, detergents, paints...