Pattern of Trade

1. The pattern is dynamic, not fixed: trade flows shift over time as competitiveness, incomes and policy change.

Factors influencing the pattern of trade

1. Comparative advantage sets the initial pattern, as countries export goods they make at lower opportunity cost, e.g. Gulf states such as Saudi Arabia and Qatar specialising in oil and gas, and many sub-Saharan African economies such as Nigeria and Zambia relying on commodity exports like crude oil and copper.
2. The rise of emerging economies shifts where goods are made, e.g. China raising its share of world manufacturing exports and pulling world trade towards Asia, while India has become a global hub for IT and business services.
3. Trading blocs and bilateral agreements redirect trade flows towards member countries, e.g. the EU single market, the USMCA agreement across the USA, Canada and Mexico, ASEAN in South East Asia and Mercosur in Latin America.
4. Changes in relative exchange rates alter competitiveness and relative prices, so a weaker currency can make a country's exports cheaper abroad and its imports dearer, e.g. the sharp fall in the pound after the 2016 referendum raising the cost of UK imports, while a weaker yen has supported Japanese car exports.

Why patterns change over time

1. A country can gain or lose comparative advantage as skills, capital and productivity develop, so today's exporter of a good can become tomorrow's importer.
2. Rising productivity abroad shifts production there, e.g. much manufacturing moved to lower-cost Asian economies such as China and Vietnam while advanced economies specialised more in services such as finance.
3. New trade agreements open new flows or divert existing ones away from non-members.
4. Commodity dependence leaves the pattern of trade exposed to world price swings, e.g. Gulf oil exporters and commodity-reliant African and Latin American economies seeing their export earnings rise and fall with global demand.