1. International Trade
International Trade and World Output
Prof. Ryan Repich
Introduction to International Business
MGMT220-1201A-04
AIUOnline
Victoria Rock
January 15, 2012
Page 1

2. International Trade
ABSTRACT
This work describes the relationship between international trade and world output. The
relationship between supply and demand, world output and international trade as
discussed and examples are provided for specific counties such as the United States and
Europe.
Page 2

3. International Trade
INTRODUCTION
International trade is the exchange of products around the world through imports and
exports that allows consumers around the world to obtain products and services that they
cannot obtain in their own countries. If international trading was to stop, each country
would suffer many losses which I hope to explain in this paper.
Page 3

4. International Trade
RELATION BETWEEN INTERNATIONAL TRADE AND WORLD OUTPUT
In order to understand the relation between international trade and world output, we
need to understand what each is first. International trade is the purchase, sale, or
exchange of goods and services across national borders. World output is the goods or
services produced by countries around the world.(International Trade) From these terms
we can see how the relation between international trade and world output go hand in hand
with one another.
International trade is important not only for the country exporting the goods, but also
for the country importing the goods. This relationship not only provides a greater choice
for goods for consumers for the importing country, but also provides for job creation in
the exporting country. International trade is affected by world output in a supply and
demand type of relationship. If the world output is low, then trade will be low as well.
The same goes for if world output is high, then trade will also be high, however though,
the pace of increase or decrease may not be the same. One example would be in times of
economic recession, people will not purchase as many products as they would if
comfortable about their financial and personal future.(Motley, 2005)
BROAD PATTERN OF INTERNATIONAL TRADE
Trade patterns are viewed by examining trade and world output, providing insight on
trade patterns and possible future growth. However, it does not define who is trading
with whom in terms of high-income and low-income nations. Through the informative
records from customs, although sometimes misleading because governments
internationally alter the reporting of trade when it is related to military equipment and
other sensitive material, we know that trade between wealthy economies make up for
sixty percent of world trade, middle income nations is about thirty-four percent and low
income nations trade is about six percent.(Motley, 2005)
WHAT WOULD HAPPEN IF TRADE DIDN’T EXIST?
If trade didn’t exist the United States as well as every nation would be devastated. In
just looking around my own home I can see several things that I would not have if it
wasn’t for trade among nations. The tv I watch, the phone I get calls on, the computer I
Page 4

5. International Trade
do my school on, certain foods that my daughter and I enjoy, as well as the cloths
hanging in our closets all come from trades from other countries. Basically the standard
of living that we enjoy and take for granted would go downhill fast. Without trade,
products like gasoline would double and maybe even triple in price due to the fact that
sixty percent of our oil comes from other countries. Prices would skyrocket because of
the lack of access to the cheaper goods we now get from other countries.(Reynolds, 2011)
Europe would lose American made cars that they enjoy driving if trade was stopped
between the United States and Europe. Other products would be Angus beef as well as
many different types of cereals and cereal preparation equipment, not to mention what
Europe would be without due to no trade to other countries.(Motley, 2005)
Page 5

6. International Trade
CONCLUSION
No matter how you look at it, trade is very important to every country in every aspect.
Without trade, choices would be fewer and more expensive if at all available. Nations
would go into deep recessions and ultimately become full of poor and hungry people. I
enjoy the benefits that trade to other countries provide and don’t want to find out what
life would be like without it.
Page 6

7. International Trade
REFERENCE
International Trade. (n.d.). Retrieved from Wikipedia: The free encyclopedia:
http://en.wikipedia.org/wiki/International_trade
Motley, L. (2005, December 9). International Trade: What is it Realy? Retrieved from
Voices:Yahoo-Business: http://voices.yahoo.com/international-trade-really-
12469.html?cat=3
Reynolds, K. (2011, May 5). What if you had to buy American? Retrieved from MSN.Money:
http://money.msn.com/how-to-budget/what-if-you-had-to-buy-american.aspx
Page 7