Questions Science and Education

How can global trade patterns affect economic development?

Airtract

Krishna Mehta

In the pursuit of happiness

Global trade and its effects are a pressing concern for many since it influences the economic landscape. It is a key factor which is brought into being while negotiating relationships with various economic partners. Some of the influencing criteria of global trade are: 

Digital Trade

Global trade doesn't just concern physical trade anymore, and there has been an immense change over the decades with the introduction of digital trade. There was a surge in cross border traffic over the previous decade, and it is bound to increase more. Due to this, the impact of trade negotiations will be less harrowing and severe for technological companies than manufacturers. 

Global Supply Chains 

Supply chains are very deeply embedded all across the globe, and they can't be that easily uprooted. With a global identity comes the specialization and a level of scalability which is difficult to replicate. This can work to a company's advantage since they can source suppliers who can churn out the needed parts in the most cost-effective way possible while also sticking to the quality requirements. Many companies also adapt to higher costs if needed because there are long term benefits to specific locations 

China 

It can be denied that China is a global and influencing power in the market for industries which range from autos to robotics and smartphones to airplanes. This rise of the country as a global power will have a big impact on world trade, and it gets more complicated as China's business relationship with the United States is interdependent and multidimensional a well. But on the other hand, China's influence has resulted in emerging markets has increased trade with developed countries as well as amongst themselves. As the global market will gain momentum, the emerging markets should profit globally. 

Labor Costs Mean Less

The very low cost of Asian or Chinese labor had given various developed countries an advantage. But the tide is changing as wages are on the rise and younger workers aren't willing to do repetitive jobs. Automation, on the other hand, is a factor which is bound to also diminish the need and importance of labor needs and costs. Moreover, in robotics, the cost of automation is declining while their capabilities seem to be on the rise. So with fewer cost advantages in China, productions are bound to move to end markets slowly. 

These factors will bring in new opportunities which will make global trade a much more competitive and yet an advantageous place for all.

Read more: How did economic nationalism affect trade in the world?

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