Page 107 - GLOBAL STRATEGIC MARKETING

find one theory that explains international trade or the flow of foreign direct
investment. International trade among the world’s high-income nations

accounts for nearly 60% of total world merchandise trade; the trade
between high-income nations and low- and middle-income nations
accounts for about 34% of world merchandise trade. The USA has a large

impact on the world economy because of its size, but it is a relatively
closed economy, with exports accounting for around 10% of gross national

product (GNP).

Moreover, trade among European Union members accounts for roughly
one quarter of the total world merchandise trade. For the UK, the value of

exports and imports as a percentage of the GNP is around 27%. This is
comparable to the position in Germany but is nearly twice as large as the
percentage in Japan. In the UK, manufactured imports in relation to home

demand rose from 16.6% to 25.7% during the 1970s. Although
manufacturers import a large proportion of their output, the UK’s share of

world trade in manufactured goods declined from around 9% in 1970 to
6% in the mid-1980s (McDonald and Burton, 2002).

Trade among the low and middle-income nations accounts for about 6%

of world merchandise trade. The economic crisis in several Asian
countries – most affecting Indonesia, Malaysia, the Philippines, South
Korea and Thailand – curtailed their output and influenced trade. The

impact of these nations on trade with other countries was limited because
these nations account for just 3.6% of worldwide gross domestic product

(GDP) and about 7% of world trade. If Japan revitalises its own economy
it could help push the rest of Asia towards increased economic activity and
output. Africa has not benefited from the massive global increase in trade;

its share of global exports fell from 3.1% in 1955 to just 1.2% in 1990. As
Africa strives to launch its products on world markets, some of the high-

income nations still maintain barriers to exports from the poorest countries
in Africa and elsewhere in the developing world. To change this, the high-

income nations need to allow African countries to display their potential,
to export what they produce most efficiently. Finally, companies become

involved in international trade to gain growth opportunity and spread their
risk. International trade theory states that such trade allows companies to