Trade Flows

Compare and Contrast the International Trade Flows

Introduction

Multiple factors determine international trade flows; among them are demand, supply, trade costs, cultural connections, and government policies. The influences of these factors vary based on the groupings that different nations have. For EU grouping, the principal objective is the promotion and facilitation of cooperation among the territorial members. EU members like France and Germany join the grouping with similar objectives of expanding their economic performance, such as enhancing imports and exports.

For France, major exports from 2010 to 2018 have been to Germany with a value of US$ 82,989 million, representing a 16.22 percent partner share. The imports were equally from Germany, worth US$ 103,434 million, and 17.26 percent partner share. The major export for France between the years was Aircraft worth US$ 35,831,627.11 million, with a significant portion going to Germany and the United States. The major imports included petroleum and bituminous oil products worth US$ 35,319,187.35 million, with more than 20 percent originating from Saudi Arabia. Graphically, imports and exports for France can be represented as below.

Figure 1 (WITS, n.d)

For Germany, major exports from 2010 to 2018 have been to France with a value of US$ 118,331 million, representing a 9.33 percent partner share. The imports were from China worth US$ 103,800 million, and 9.79 percent partner share. The major export for Germany between the years were automobiles worth US$ 44,860,010.53 million, with a significant portion going to the United States. The major imports included petroleum and bituminous oil products worth US$ 52,603,077.21 million, mainly from Norway, Russia, and the United Kingdom. Graphically, imports and exports for Germany can be represented as below.

Figure 2 (WITS, n.d)

Trade patterns for France

Most of the economic operations in France through the spheres of international trade happen with the European Union (WEDC, 2018). In particular, the growth in imports and exports within these regions has been accelerated by the liberalization emanating from European integration. The economic theory of free trade, unlike mercantilism that imposes restrictions to promote domestic...

France enjoys relaxed restrictions within the EU to increase its imports and exports. The average increase in exports to Germany has been due to the increased demand for aircraft and other aeronautics products and the European Commission's policies that monitor developments among EU states. Through these policies, France enjoys 50 percent (2015 report) of its GDP from external engagements that include exports (WITS, n.d). This figure was significantly high compared to the gains through incoming investments. France imports energy in the form of petroleum products that enable it to enhance its production processes (WITS, n.d). The result is economic growth that is conspicuous in various ways. As per the 2014 report, 22 percent of France's GDP resulted from the contribution of the foreign markets. The average international orientation in 2014 was at 24 percent (WITS, n.d).

In analyzing the exports, it is essential to evaluate value addition which constitutes a significant portion of France's exports. Chemicals and related products and transport equipment benefit from the value-addition, hence broadening their demand among the EU nations (Meunier & Nicoladis, 2017). In this context, the inward investments are directed to the services sector. Thus, value-addition implies more demand for the supplied products hence responding to the theory of demand and supply. In this theory and response to the technological dynamics with the EU grouping, the demand for even more modern equipment has been on the rise. Unlike before 2010, when the international trade flows for France were limited to financial constraints, crisis, and liquidity declination, that saw a change in market response. The result was a negative export legacy. As per figure 1, the value of imports between 2010 and 2018 was significantly higher than imports implying that despite the large revenue that France gets from exports, it has a considerable reliance on the imports. Here, it is important to distinguish between export expenditure and import expenditure. The disparity between imports and exports does not mean that France has little gains from exports. Instead, some of the imports contribute to the domestic GDP implying and overall economic growth.

Trade patterns for Germany

Germany leads in the exportation of automobiles and other machinery (WITS, n.d). This advantage emanates from skilled labor but faces a major risk due to the challenges of sustaining growth and social welfare concerns. According to figure 2, the average exports for Germany are higher than imports, signifying the EU grouping's importance to Germany's s economy (WITS, n.d). Despite the low responsiveness, there has been an average increase in imports. As per the theory of demand and supply, Germany's demand for foreign products has registered a rise. The products that fall within these spheres are cheaper than domestic products. However, the price and demand aspects are the only determining factors influencing the importing trend (Stirbck, n.d). It is vital to highlight that some products like petroleum products register high demand due to scarcity and not the high domestic prices. Though the graph gives a cumulative analysis of all the…