A) The significance of foreign trade and economic relations

It is hard to overestimate the significance of foreign economic trade links. There practically can

be no question as to any nation’s dependence upon the world economy, including the U.S., Russia,

Germany, France, Great Britain, Japan.

The United States, for example, is almost entirely dependent upon the imports from the countries

for such products as diamonds, bananas, coffee, tea, cocoa, nickel, tin, and natural rubber.

Russia depends upon the imports of food stuffs, computers, television and electronics technology.

Japan depends upon raw resources, etc.

However, a number of countries manufacture similar production of high quality.

Casual observation suggests that imported goods compete strongly in many of the American

domestic markets: Japanese cameras and video recorders, French and Italian wines, English bicycles,

and Japanese motorcycles and autos are a few cases in point. Foreign cars have made persistent

gains in American markets and now account for about 25 percent of total sales in the United

States. Even the great American pastime — baseball — relies heavily upon imported gloves!

But world trade is a two-way street, and a host of American industries are highly dependent

upon foreign markets. Almost all segments of agriculture rely heavily upon foreign markets — rice,

wheat, cotton, and tobacco exports vary from one-fourth to more than one-half of total output.

The chemical, aircraft, automobile, machine tool, coal, and computer industries are only a few of

many American industries which sell significant portions of their output in international markets.

Russia successfully exports timber, oil, gas, steel, complex kinds of armament and many other things.

Trade patterns are of great significance.

Firstly, the exports of goods are substantially in excess of the imports of goods, which is characteristic

of any developed country. There must not be any disbalance in the international trade.

* Source: The World Bank, Wor ld Development Report, 2002.

** Data are on a national income accounts basis.

Secondly, it is important to know: 1) to what countries the main part of exports is practised and

2) what kind of production it is.

In the case of the export trade with highly developed countries currency receipts increase.

Changes in net export, that is, in the difference between the value of a nation’s exports and that

of its imports, have multiple effects upon the level of national income in roughly the same fashion

as do fluctuations in the various types of domestic spending. A small change in the volume of

imports and exports of any nation have magnified repercussions upon the domestic levels of income,

employment, and prices.

With these points in mind, we need not belabor the significance of international trade for such

nations as the Netherlands, Japan, Australia, and Great Britain, whose volumes of international

trade constitute substantially larger fractions of their national incomes.