Global Trade

Necessity

Specialisation

Due to the fact that the earth’s climate varies Ability of a region to grow or produce all of its

needs is rare. Most places in the world are limited in one

form or another from total self sufficiency. As such, each region / nation tends to focus

on matching their region’s characteristics what they can do economically.

This is called specialisation.

Complementarity

Complementarity is the interchange of needs and wants. A nation has raw resources, but no industries

to process them. Another country has the industrial capacity, but

not the raw goods. The development of mutually beneficial trade is

termed complementarity by geographers. The wealthiest nations in the Industrial Revolution

were those that had little complementarity. United States = wealth of the nation stays in the

nation.

Complementarity does not usually exist with nations from the same climate / region.

Canada cannot grow tropical fruit so it will try to develop trade with nations that can help.

Canada does not need iron ore or minerals from Sweden or South Africa because we already have an abundance.

Inhibitors to Complemenarity

Politics: The political structure of the nation can inhibit trade. The American government has tried for decades to impose reforms on the Communist government in Cuba. Canada led a similar movement in the 1980s towards South Africa in order to end Apartheid.

Distance: The distance between nations who wish to trade may be a factor. The nation has to balance the cost of shipping goods from across the globe to the benefit they will have within the nation.

If the cost of such goods are too high, no one could afford to buy them (luxury items).

This is the case within Canada because of its size. It is easier for ON power plants to buy coal from the

US than to ship it in from the E or the W.

Because of location Canada and the Unites States have a high degree of complementarity. As of 1996

82% of Cdn exports went to the US 72% of Cdn imports came from the US

So Why do We Trade?

In the 1600s when modern economics was being formulated issues of balance of trade led to wars among nations.

In today’s world this is costly in lives and bankrupts nations.

Today most nations are guided by the acceptance of the idea of trade as a way to improve national standards of living. However, the ability of a nation to do this

depends on the wealth the nation has (Jamaica)

Wealthier nations can increase their wealth through trade imbalances.

These funds can be funnelled back into society (social welfare net) – North America after WWII.

Without accepting specialisation these surpluses would be wasted trying to provide what is not natural – greenhouses in the artic.

Surpluses can be used to lower price of imported goods and make them more affordable.

Increased Demand / Limited Supply

After the Second World War, Europe and North America industrial capacity was fuelled by consumerism. In North America, this has increased to

unprecedented levels and has led to an increased imbalance on the allocation of resources.

Food production – monoculture Over harvesting of resources (fishing)