The Geographical and Commodity Structures of International Trade

Geographic and commodity structure is an important feature of international trade and presents a structure in terms of geographic distribution and commodity filling.

Geographic structure of international trade means the distribution of trade flows between separate countries and their groups, created according to territorial or organizational criterion.

Territorial geographic structure generalizes information about international trade scale of countries belonging to the same part of world or extended country group (developed countries, developing countries, countries in transition).

Organizational geographic structure generalizes data concerning international trade between both countries belonging to international trade and political unions and countries, which are separated in defined groups by the chosen criterion (oil-exporting countries, debtor countries etc.).

Geographic structure of international trade was formed under the influence of world economic division of labor and scientific and technical revolution development (table 3.2).

Table 3.2. Geographic structure of the world merchandise trade by separate regions in 2012

Source: [1,6].

Commodity structure of international trade is formed under the influence of competitive advantages, which are available for the national economy. A country has competitive advantages only if prices on export commodities (or domestic prices) are lower than the world ones. Difference in prices occurs due to different production costs, which are depended on two factor groups.

The first factor group is formed by natural competitive advantages. Among them are natural-geographical factors: climate, availability of mineral fossils, soil fertility etc.

The second factor group (the socio-economic one) is formed by gained competitive advantages. These factors define scientific-technical and economical level of country development, its production apparatus, scale and sequence of production, production and social infrastructure, scale of research activities. All this defines competitive advantages, which were gained in the development process of the national economy.

There is a typical tendency in merchandise trade: the growth of specific weight of the trade in manufactures (about % of the world export cost volume) and reduction of raw materials and provision unit weight (about Va).

The commodity structure by regions is presented below (see Table 3.3).

Table 3.3. The structure of world merchandise export by major product categories by regions, 2012

Source: [1; 6,32].

The data in table 3.3 show the relationship between the level of economic development and the structure of foreign trade. So, for the countries of Western Europe, North America and Asia, related to the industrialized and newly industrializing countries that are predominantly acquired competitive advantage in the export structure dominated by manufactures. Both Middle East and Africa, being countries with rich natural resources, have high enough proportion of the fuel industry. The CIS countries make extensive use of its natural competitive advantages, and therefore in the commodity structure, which is different from the world average, there is a high proportion of production extractive industries and, relatively, the low one of manufactures.