Foreign trade turnover - what is it?

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:53

Foreign trade turnover is nothing more than a digital expression of the volume of a country's international trade. This type of activity is one of the most ancient forms of relations between states. There is a sufficient amount of historical evidence that at first merchants and other "trading people" went "over the seas", and only then diplomats followed in their footsteps. Quite often, the functions of diplomatic representatives were entrusted just to merchants, as people who are well acquainted with the customs, traditions and internal structure of the host country.

Development of foreign trade relations

Since the first attempts to trade with neighboring countries, the role of foreign trade has steadily increased. Naturally, relations between states were not always favorable, and there were periods of tension that did not contribute to trade exchanges. But the general trend towards an increase in the volume of interstate trade relations continued.

During the 20th century, world trade as a whole developed at a fairly high pace - up to 3.5% per year. The exceptions were the periods after the First andWorld War II and the Great Depression. After the Second World War, there was a particularly strong growth in foreign trade turnover. This is quite natural, because after a period of global destruction, a huge amount of effort had to be made to restore the destroyed economies.

The main way to do this was to reallocate resources from countries least affected by the fighting. In the period up to 1974, the volume of world export transactions grew by approximately 6% annually. To a large extent, this was facilitated by the transition to the Bretton Woods monetary system, the Marshall Plan and the formation of the World Trade Organization.

For a better understanding of the further development of world foreign trade, it is worth dwelling on them in more detail.

Bretton Woods monetary system

The Bretton Woods system or, as it is also called, the Bretton Woods Agreement is an international system of monetary relations and organization of settlements between countries, formed as a result of a 1944 conference held in the small resort town of Bretton Woods (State of New Hampshire, USA).

In fact, the end date of the conference can be considered the date of foundation of such well-known international financial institutions as the IMF and IBRD.

One can single out the principles adopted in international foreign trade as a result of this conference:

1. Hard-fixed gold price of $35/oz.
2. Fixed exchange rates of the participating countries against the US dollar, which has becomekey currency.
3. The central banks of the participating countries have pledged to maintain a stable exchange rate of their own currencies against the US dollar. For this, a mechanism of foreign exchange interventions was developed.
4. Changes in exchange rates are only allowed through devaluation and revaluation of national currencies.

Marshall Plan

The Marshall Plan was the common name for the "Programme for the Reconstruction of Europe" at the end of World War II. Named for US Secretary of State George C. Marshall, who nominated him in 1947

17 European countries fell into its coverage area. Its main tenets are:

• European economic recovery;
• lifting trade restrictions between countries;
• modernization of European industry;
• development of Europe as a whole.

World Trade Organization

The World Trade Organization was established in January 1995.

It was actually the legal successor of the GATT (general agreement on tariffs and trade), which existed since 1947 and actually performed the role of an international regulatory organization, although this was not formalized legally. The main functions of the WTO:

1. Develop new trade agreements.
2. Introduction of the developed agreements into the interstate relations of the participating countries.
3. Monitoring compliance with the agreements reached.

Since the formation of these mechanisms, foreign trade began to change dramatically. Subordinationa large number of national economies, among which were the largest at that time, the uniform rules for the functioning of foreign trade, could not but lead to its sharp increase. In the end, that is what happened. Serious growth rates of foreign trade operations after that were reduced only once - in the mid-80s. It was related to the oil crisis.

Structure of foreign trade turnover

The main volumes of foreign trade are export-import operations for the following groups of goods:

• hydrocarbons;
• minerals;
• food;
• machinery and equipment;
• services in various fields.

In general, it can be noted that over the half-century period after the end of World War II, world exports increased by more than 100 times - up to $2.5 billion.

The fact that the world economy began to have a much greater bias towards foreign trade operations can be seen by comparing the growth rates of the main national economies and their export operations. On average, the growth of exports from the country outpaced the overall economic growth by 1.5 times.

If we talk about the second component of foreign trade - imports, we can state that the growth of its share in the volume of finished goods and services over the same period increased by about 3 times. And if the state does not aim at artificial isolation from the world market, then its trend in foreign trade operations will coincide with the global one.

Basic concepts

Foreign trade turnover is the sum of a country's exports and imports. Export showsthe amount of goods and services exported from the country. Imports, respectively, - imported into the country. Due to the heterogeneity of positions that cannot be compared in physical volumes, foreign trade turnover is estimated in value units.

Several of the most significant concepts of foreign trade can be distinguished:

1. Balance of foreign trade operations.
2. Export/import growth rate.
3. Export/import quota.

The balance of foreign trade operations is the difference between exports and imports. It can have both a positive and a negative value, depending on the volumes of the respective flows. In accordance with this, they speak of a positive or negative balance in the trade balance of the state. Another name can be used to describe such situations - active and passive trade balance.

The export/import growth rate shows the percentage change in the studied flow relative to the base period. Can be calculated on any comparable time intervals.

Export and import quotas are used to assess a country's dependence on foreign trade. This calculates the share of exports or imports in the total GDP (gross domestic product) of the state.

Russia's foreign trade turnover

Russia's foreign trade is based on the same principles as international trade. There are exported goods and services, there are imported ones. In foreign trade turnover, exports consist of several large groups:

• hydrocarbons (oil and oil products, gas and coal);
• metals andfinished products of them;
• machinery and equipment;
• chemical products;
• food and agricultural products.

It is worth noting that since 2016, non-commodity exports in commodity terms increased by 9.8%, in value terms - by 22.5%. The export of IT industry products also increased to significant levels. This mainly concerns software and anti-virus products.

Import of foreign trade turnover is represented by the following positions:

1. Machinery and equipment.
2. Pharmaceutical products.
3. Plastic and plastic products.
4. Food products (fruits, meat and by-products, dairy products, alcoholic products, vegetables).
5. Computer technology and spare parts.

The total volume of foreign trade of the Russian Federation in 2017 reached $584 billion. The increase from 2016 was 25%.

Export growth - USD 357 billion (up 25%), import - USD 227 billion (up 24%).

It can be said that the gradual recovery of the Russian economy from the crisis and the easing of tension in international relations instantly produced an effect in the form of an increase in foreign trade turnover. This confirms the thesis that the political and foreign economic spheres are directly connected. A change in one is immediately reflected in the other. Such is the modern world order, and with this it is necessarybe considered.