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Economics

Study Notes

Globalisation - Intra Regional Trade

Level:
A Level
Board:
AQA, Edexcel, OCR, IB

Intra-regional trade happens when trade in goods and services happens inside a specific region of the world economy such as sub-Saharan Africa or the member nations of the European Union

Overview of intra-regional trade

Low intra-regional trade in Africa

Over 80% of Africa's exports are shipped overseas, mainly to the European Union (EU), China and the US (Source: UN Report)

Africa's intra-regional trade share doubled from 6% to 12% between 1990 and 2011

But this is small compared to more advanced regions

Why is this?

  • Many African countries are highly specialized in and dependent on extracting and exporting primary commodities
  • Limited infrastructure like roads, energy and physical networks to support international trade – increasing the costs of getting products to market.
  • Overlapping trade blocs in Africa
  • Few significant import hub countries
  • Smaller size of consumer markets in Africa – therefore less profit incentive
  • Weaker governance, fraud, many non-tariff barriers to trade such as cross border restrictions that delay trade flows
Trade blocks in the African continent

The rise of intra-Asian regional trade

There has been a surge in intra-regional trade within Asian countries

The share has grown from 42 per cent in 1990 to 52 per cent in 2011 – now a majority of trade

Most of the change is due to a fall in the share of North America in total Asian trade

Many Asian countries have achieved fast progress towards a highly diversified industrial base.

Increasing capacities and competencies in producing many different goods and services has accelerated intra-industry trade e.g. as countries supply different components.

Asia is building complex and large supply chains and trading more within the region as a result

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