Commodity and Geographical Structure of International Trade and Trend of its Change

Published: 2021-07-05
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University of Richmond
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Problem solving
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Commodity and geographical structure is an essential characteristic of international trade and presents a structure regarding commodity and geographical filling. In international trade, geographical structure infers to the distribution of trade flows between different nations and their groups developed based on an organizational or territorial criterion. In this case, territorial geographical structure generalizes information regarding international trade scale of different nations that are found within the same part of the world, or they may be extended country group like developing nations, developed nations or nations in transition (Knox, Agnew, & McCarthy, 2014).

The other structure is an organizational structure which generalizes information regarding international trade between nations that belong to political unions, international trade, and nations that are separated in distinct groups by the selected criterion. For instance, debtor countries and oil-exporting nations .

Consequently, in international trade geographical structure was created under the influence of global economic division of labor and scientific as well as technical revolution development. The table below shows the trends in change in geographical structure of the global merchandise by various regions in 2012

Export volume Region Import volume billion dollars % billion dollars %

18401,0 100,0 World 18601,0 100,0

2371,4 12,9 North America 3192,0 17,2

749,6 4,1 Latin America 754,7 4,1

6384,8 34,7 Europe 6530,5 35,1

5803,3 31,5 EU 5937,6 31,9

805,3 4,3 CIS 569,1 3,1

529,3 2,9 Russian Federation 335,5 1,8

630,0 3,4 Africa 610,2 3,3

1349,0 7,3 Middle East 739,6 4,0

6110,6 33,2 Asia 6205,1 33,4

798,6 4,3 Japan 885,8 4,8

2048,7 11,1 China 1818,4 9,8

294,2 1,6 India (

Consequently, commodity structure is created under the influence of competitive advantages that are often made available for a national economy. Notably, a country is considered as having a competitive advantage if its prices on export commodities are lower as compared to the world prices. Differences in costs often occur as a result of the difference in production costs which are dependent on either a natural competitive advantage or the socio-economic factors.

Insurance of currency risk in the foreign trade contract can be carried out

Currency risk in the foreign trade contract is carried out based on certain conditions. The first condition is a monetary condition which is the process of determining the currency of settlement and payment system.

Pride currency which is also called the transaction currency is used to express the price in the contract.

Payment currency infers to the amount made for services and goods under the contract (Murrell, 2014)

Settlement terms often depend on nations-participants of the foreign trade contract, the kinds of commodities, availability of intergovernmental agreements, commodity market, and banking systems (Gopinath, Helpman & Rogoff, 2014).

All financial conditions of contracts, the involved parties must always specify by agreements


Clients from Ukraine have a choice of the currency of price as well as payment currency in large transactions require to coordinate with specialists that are competent as a result of the need for awareness of the circumstance in the international foreign exchange market as well as forecasting exchange rate.

Much precedence is often accorded to currency risks arising from export-import operations and also the sale of goods in credit in case of change of foreign exchange rate as a result of a drop in purchasing power caused by deteriorating terms of trade.

Major factors of pricing in the world commodity markets

There are many factors that affect the pricing in the world commodity markets, some of these factors include;

Weather conditions: most of the commodities that are traded in the global markets are mostly agricultural commodities and the production of these agricultural goods solely depends on the weather. Any slight change in climatic weather conditions such as inadequate amount of rainfall or droughts is most likely to have adverse effects on agricultural goods sin the global markets resulting in scarcity and thus inflating the prices of these commodities.

Government policies: the government is tasked with the mandate of making policies that govern the operations of trade. Any slight change in government policies particularly the ones impacting export/import cost to the seller or the buyer will have a huge impact on the prices of commodities. For example, if the Turkish government increases its export duty on edible oil, its price is most likely to show a proportionate increase (Tadasse et al., 2016).

Political and economic situations: the prices of products are also influenced by particular political and economic conditions of the nations that are producing as well as consuming them. Looking at the example, during the war in Iraq and Iraq is globally renowned of its oil, during the war the prices of oil fluctuated very often (Hochman et al., 2014). Furthermore, weak economic conditions reduce the spending power if clients are resulting in falling in demand that results in price movements. Other factors include seasonal variations, inflation rates, and currency movements among others.

Unemployment: Essence, types, unemployment reasons

Unemployment refers to the socio-economic phenomenon whereby there is the section of the working population that cannot secure jobs and therefore realize that the ownership of their labor is quick abundant on the effectiveness of the capital (Marx, 2016). Therefore, the unemployed population refers to those people that are willing and able to work but cannot get the job opportunities. Unemployment deals with the aspects such as the need of labor, lack of employment, job search or the desire to work unemployed (Ehrenberg, 2016). The three main types of unemployment are structural unemployment, frictional unemployment, and technological unemployment. Structural unemployment is the kind of unemployment where there are vacancies through geographical remoteness, professional mismatch or lack of enough training. It is largely caused by intense structural changes in the economy and is therefore usually long term (Vansteenkiste, 2017). Frictional unemployment is caused by the due to the labor turnover and the changing from one activity to the other. When one leaves a job going to the other, frictional unemployment comes into place. Technological unemployment refers to the displacement of workers because of the introduction of computerization and automation of technological processes. Another type of unemployment is seasonal unemployment that can also be categorized as either conversion rate or cyclical unemployment. Unemployment is brought about by various reasons (Kroft, 2016). One of the reasons is the change in technology which makes the manual people to be laid off. Unemployment is also brought about by the lack of job opportunities. Another reason is the lack of the needed skills to perform certain goals thus leaving people unemployed. Unemployment can also be caused by the closure of companies that the employed population as working on.

Types of international counter commercial transactions

The types of international counter commercial transactions can be categorized into the two types of treaties that are involved in international counter commercial contracts. These are the treaties that govern the enforcement of the arbitral awards and the treaties that govern the underlying commercial transactions (Mugarura, 2016).

What function is performed by the import duties in the developed nations at the present stage

The import duties have three basic functions. They include protecting the domestic industries from being overpowered by the foreign countries; they are the source of income to the developed countries and they also remedy trade distortions. The revenue role is brought about by the fact that the income from the import duties gives the government a source of funding.


Increase in the quotas for import of the goods at the rate of 500 million monetary units

Before this, import of the goods was 300 million monetary units

General requirement of the market- 950 million monetary units

Calculate how the share of the market of the national enterprise will change

The national market share = Total sales/revenues/ national total sales

= 950 million monetary units/ 300 million monetary units

Market share = 3.16

New market share: 950 million monetary units/ 500 million monetary units

Present market share: 1.9

Change in market share: 3.16 -1.9

Therefore, the change in market share is: 1.26 and it is negative


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Murrell, P. (2014). The Nature of Socialist Economics: Lessons from Eastern European Foreign Trade. Princeton University Press.

Tadasse, G., Algieri, B., Kalkuhl, M., & von Braun, J. (2016). Drivers and triggers of international food price spikes and volatility. In Food Price Volatility and Its Implications for Food Security and Policy (pp. 59-82). Springer International Publishing.

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