Features of the world market of goods and services

The deepening of the international division of labor, the development of trade between countries inevitably leads to the formation of a world market.

The world market of goods and services is a system of economic relations in the sphere of exchange, which is formed between subjects (states, enterprises engaged in foreign economic activity, financial institutions, regional blocs, etc.) regarding the purchase and sale of goods and services, i.e. objects of the world market.

As an integral system, the world market was formed by the end of the XIX century simultaneously with the completion of the formation of the world economy.

The world market of goods and services has its own characteristics. The main thing is that transactions for the purchase and sale of goods and services are made by residents of different states; goods and services, moving from producer to consumer, cross the borders of sovereign states. The latter, implementing their foreign economic (foreign trade) policy, with the help of various tools (customs duties, quantitative restrictions, requirements for compliance of goods with certain standards, etc.) have a significant impact on commodity flows both in terms of geographical orientation and industry affiliation, intensity.

Regulation of the movement of goods on the world market is carried out not only at the level of individual states, but also on the line of interstate institutions – the World Trade Organization (WTO), the European Union, the North American Free Trade Agreement, etc.

For example, the fundamental principles and rules of the WTO are:

the granting of most-favoured-nation  treatment in trade on a non-discriminatory basis; reciprocal granting of national treatment to goods and services of foreign origin; regulation of trade mainly by tariff methods; non-use of quantitative restrictions; transparency of trade policy; resolution of trade disputes through consultation and negotiation.

All WTO member countries (and there are more than 140 of them) commit to the implementation of about 20 major agreements and legal instruments, united by the term “multilateral trade agreements”, covering over 90% of all world trade in goods and services.

Competition in the world market takes place in more diverse forms than in the markets of individual countries, and involves the use of a wide range of methods. Non-price competition in modern conditions is dominant, price competition is characteristic of an absolute minority of goods. Non-price competition involves the competition of goods in qualitative parameters, as well as in the “package of services” “attached” to the goods.

Changes in the competitiveness of goods have a number of consequences, in particular, a change in the structure and direction of commodity flows in the world economy, as well as the correction of the role and “weight” of certain countries. For example, in recent decades, the position of newly industrialized countries and China has significantly strengthened in world exports, the share of the United States, on the contrary, has noticeably decreased.

Indicators and functions of international trade. Forms of international trade.

If foreign trade is the trade of one country with other countries, consisting of the import (import) and export (export) of goods and services, then international trade is a set of foreign trade of the countries of the world.

Foreign and international trade is characterized by such important indicators as the total volume (turnover), commodity structure, geographical structure.

The twentieth century was marked by a higher growth in world exports in comparison with the growth rate of world GDP or industrial production. So, if the average annual GDP growth was 3%, then world exports, respectively, 4.5-5%. However, the dynamics of world trade in individual countries and regions varied, as shown in table 1.

Table 1 Resource requirements by component

Dynamics of the physical volume of world trade, % by 1980*

* – Source: Monthly Bulletin of Statistics/ 1993, July; 2000, October.

The commodity structure of world exports is undergoing significant changes (see Table 2).

Table 2 Resource requirements by component

Commodity structure of world exports by main groups of goods, %.**

** – Source: Monthly Bulletin of Statistics/ 1993, May; 1998, May; 1999.

As we can see, the dynamics of the structure of world exports by major groups of goods is developing in such a way that the prevailing group is still manufactured products with twice the share against the background of a significant reduction in food and raw materials.

It is important to note that the structure of exports reflects the level of economic development of the country. Therefore, it is natural that the exports of developed countries are dominated by manufacturing products, and in the exports of developing countries – agricultural and raw materials. In addition, the price situation on world markets is more favorable for manufactured products, which cannot be said about food or raw materials.

A picture of the geographical structure of international trade is presented in Table 3.

Table 3 Resource requirements by component

Distribution of foreign trade by geographical directions, %.***

– Source: Monthly Bulletin of Statistics/ 1992, July; 1993, July; 1999, July; 2000, July.

International trade affects the state of the national economy, performing the following tasks:

Filling the missing elements of national production, which makes the “consumer basket” of economic agents of the national economy more diverse; Transformation of the natural-material structure of GDP due to the ability of external factors of production to modify and diversify this structure; Effect-forming function, i.e. the ability of external factors to influence the growth of the efficiency of national production, the maximization of national income with a one-time reduction in socially necessary costs for its production.