The Changing Pattern of Trade

From the 1880s to the 1950s, the majority of trade occurred between North and South (Uk, Germany -> Africa, South America)

But from the 1950s, trade now mainly flows between developed nations (North-North)

Why

• Lots of trade deals between big countries
  • EU - Free trade / no tariffs
• Newly industrialised countries - MINT, BRIC
  • These disrupt trade and northern countries are trade with China instead

Example Question

The UK has seen significant changes in its pattern of trade with the rest of the world in terms of what we write and with whom. The UK's current account deficit widened from £29.1bn in 2011 to £100.2bn in 2015. The deficit in 2015 was 5.4%, the largest annual deficit as a percentage of GDP since records began in 1948.

Explain the possible reasons for changes in the pattern of trade between the UK and the rest of the world.

Trading blocs

The UK used to trade with developing nations for raw materials and there were not many trade agreements. However, over time the EU has grown significantly, a trading bloc with no tariffs, allowing free trade within the block. This meant that the UK increased trade within the EU and decreased trade with southern countries. This is because consumers choose cheaper products which come from the EU since there are no tariffs, and firms also trade with the EU because there are no tariffs, which means they can make more profit. Southern countries are not part of the EU, so they are left out of the free trade agreement.