International Trade - a delicate balancing act
Who is buying and who is selling?
*Sponsored content
Beneath the surface of the seemingly simple concept of global trade (actually no, who said it’s simple?) lies a web of imbalances and power dynamics. Trillions of dollars worth of merchandise transfer hands each year, with tiny countries frequently boasting selling power that far outweighs their larger neighbours.
Advanced vs emerging economies
The IMF classifies a country’s economy as advanced or emerging depending on several different factors including income per capita, government spending, and the country’s integration within the global financial system. There are only 39 of these, which include the US, much of the EU, and Australia.
Emerging economies can actually be split further into emerging-middle-income and emerging-and-developing countries. Developing nations are typically poorer, while middle-income countries have pretty steady economic growth and a substantial share of global trade. Prime examples of middle-income countries are the BRICS while developing countries include nations like Bangladesh or Nigeria. There are 20 middle-income countries, with the rest classified as developing. You can check the full list here.
On average, emerging economies have a positive trade balance - meaning they export more than they import. This is partially due to lower labour costs, as well as mining for precious metals - think cheap t-shirts made in Bangladesh, or cobalt mines in Congo.
Advanced economies, on the other hand, have a negative trade balance - importing more than they export. The COVID pandemic only widened this gap even further, with advanced economies almost doubling their imports as everyone was stuck at home (and ordering random things off Amazon).
How does the US compare?
As a key player in global trade, the US understandably has links to every corner of the globe. But how have these relationships changed over time?
In 2000, the US both imported and exported most of its goods from its continental neighbours to the north and south - mostly Canada and Mexico. They also had trade deficits (importing more than exporting) with every continent. Ten years later, the trade deficit with Asia had increased by almost 50%, rapidly overtaking the Americas; this increased even more by 2020 to over 2.5x of the deficit in 2000!
There has also been a notable increase in imports from Europe, with the deficit quadrupling from 2000 to 2020. Interestingly, the US has progressed to a positive trade balance with Oceania and Africa by 2020, with machinery and vehicles being the top categories exported to those regions.
Stratosphere: The all-in-one platform for investors 🤩
You can do all your fundamental analysis in one place with Stratosphere. They have all the information you need, including: Financials, KPIs, Price Targets and Forecasts from Analysts, and much more!
What separates Stratosphere from other financial data platforms is their KPI dashboard which you can completely personalise, choosing companies and metrics you want to track. This makes it so much simpler, and less time-consuming to compare between different companies, and helps you make more informed investment decisions.
Sound good? Stratosphere is offering a huge 25% discount to our readers, using the code: GI25
*This is sponsored advertising content.
World’s largest exporters
Putting everything in a global perspective, let’s take a look at who exported the most goods in 2022. China, unsurprisingly, took the top spot with $3.6 trillion worth of exports. The US comes in second, with the likes of Germany, Japan, and South Korea, filling out the rest of the top 10.
In the trade world, size does not matter. The Netherlands, a country approximately 7.5% the size of France, exported 1.5 times as much as the French, while the city-state of Singapore exported the 13th most in the world and the 4th most in Asia.
Interesting fact of the day - the top 9 countries together exported more goods than the rest of the world combined. To put into perspective just what a staggering amount of merchandise that is: $11.6T worth of top-spec Macbook Pros ($2500 each) would be 4,640,000,000 laptops. The full list can be found here (we used WTO figures).
Created by Miguel
Which country do you think has the highest exports per capita? Vote in our poll below:
The answer can be found here
Want to earn a paid subscription to our newsletter for free? Use the referral link below and you’ll get credit for any new subscribers that you bring into our network. You can send it over text, email, or share it on social media!
We’ll give you free access to our paid features depending on how many referrals you manage, including a longer Friday deep-dive and unlimited access to our archive (free posts get locked after 3 days). There’s no time limit either!
1 month comp after 10 referrals
3 months comp after 20 referrals
12 months comp after 50 referrals
(if you’re already a paying reader, any rewards will be applied after the end of your current billing cycle)
Thanks for sharing