- 18 Mar, 2021
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IM
On completion of this chapter you will be better able to:
• Identify the dimensions of the world trading environment
• Describe the impact of emerging and developing nations on global markets
• Examine and evaluate the concept of “comparative advantage”
• Describe the barriers to world trade
• Identify the major world trading blocs and describe their function
2.1 Introduction
The world is made up of over 195 independent nations (US State Department 2013),
and the current population is 7.1 billion (US Census November 2013). The current
global total economic output or equivalent Gross Domestic Product (GDP) is US$71.9
Trillion (World Bank).
In 2009 global GDP was minus 0.5% following the banking crisis and the subsequent
recession in world markets. Growth in world GDP was 3.2% in 2012, as the global
economy slowly showed signs of recovery from the financial crisis. GDP in 2013 is
estimated to have been 2.9% as the world economy showed some stagnation and
slower recovery rates. https://data.worldbank.org/
World trade in merchandising is approximately 30% of global GDP, and in services it
is 70%. However, countries rich in minerals and oil (e.g. Azerbaijan) will generate more
product sales, meaning services represent only 30% of their GDP; while countries with
a thriving tourist industry (e.g. Barbados) will generate 85% of their GDP from services
e.g. hotels, retail, transport and restaurants. (www.worldbank.org)
Global trading is not equally distributed, as there is a continuum of development among
the independent nations, ranging from n