Trading nation

Atrading nation(also known as atrade-dependent economy,or anexport-oriented economy) is a country whereinternational trademakes up a large percentage of its economy.

Smaller nations (by population) tend to be more trade-dependent than larger ones. In 2022, the most trade-dependentOECDmember wasLuxembourg,where trade was worth 384% ofGDP,while the least trade-dependent was theUnited States,where trade made up 26% of GDP.

Free trade

Trading nations tend to favourfree tradeandeconomic integration,or at least seekmarket accessfor their products (they may also seek some form ofprotectionismfor their own industries). The most desired markets to access are thelargest ones.

In 2012, the Canadian news columnistAndrew Coynedescribed countries with free trade with both theEuropean Unionand the United States as a "select group" that includesColombia,Israel,Jordan,Mexico,Morocco,andPeru.He describedSouth Korea,Chile,andSingaporeas "buccaneering free traders" and the only countries to rivalCanadain "scale and scope of the trade agreements" that they had signed (roughly 75% of Canada's trade is tariff-free).

South Korea has a free trade agreement with the United States and India and is negotiating withChinaand the European Union. Chile has free trade agreements with the United States, the European Union,Japan,China and Mexico but notIndiaor South Korea. Singapore has agreements with the United States, Japan, India, China, and South Korea and is in negotiations with the European Union. Coyne argued that if Canada successfully completed agreements with the EU, China, and India, around 90% of Canada's trade would be tariff-free, and it would then make sense to unilaterally abolish any remaining tariffs.

Small countries orcity-statesthat are extremely reliant on international trade are sometimes calledentrepôts,which typically engaged in there-exportof products produced elsewhere or finance and services (seeoffshore financial centre). Modern examples includeHong Kong,Singapore,andDubai.

Both developed and developing countries rely on trade. Many developing nations pursue a policy ofexport-oriented industrialization,which they hope will lead toexport-led growth.

Types

There are three types of exporting economies:commodityexporters, manufacturing exporters, and services exporters. Most countries, however, do not fall purely in one category.

Commodity exporters include countries with large deposits ofnatural resourcesor large amounts offarmland,with populations too small to use all their own resources. The trade of many commodity exporters is dominated by a single commodity. Mostleast developed countriesare reliant on agricultural exports. A 1998 statistical review by theFood and Agriculture Organizationshowed that 32 developing countries relied on a single commodity for more than half of their agricultural export earnings.Agricultural exporters are generally members of theCairns Group,a coalition of 19 countries thatlobbyfor more market access.Fossil fuel exporters,such theOPECcountries, are an important and influential subset of commodity exporters.

Manufacturing exporters include manydensely populatedcountrieswhere human labour is the most important resource. They include wealthy countries such as Germany and Japan, as well as developing nations like China and India.

Services-exporting countries include hubs of internationalfinance,tourism,healthcare,andeducation.Manyhighly developed countriesexport services.

Some countries export all of commodities, manufactures, and services. For example,Canadais regularly described as a trading nation as its total trade is worth more than two-thirds of its GDP (the second highest level in theG7afterGermany),which includes all sectors of the economy.

See also

• List of countries by total trade
• List of countries by exports per capita
• List of countries by exportsandList of countries by imports

External links

• Evolution of the world's 25 top trading nations-United Nations Conference on Trade and Development