Foreign trade turnover - what is it?

Foreign trade turnover is nothing more than a digital expression of the volume of international trade of a country. This type of activity is one of the most ancient forms of relations between states. There is a sufficient amount of historical evidence that at first merchants and other "trading people" went "beyond the seas", and only then diplomats followed in their wake. Quite often, the functions of diplomatic representatives were entrusted to just merchants, as people well acquainted with the customs, traditions and internal structure of the host country.

The development of foreign trade relations

Since the first attempts at trade with neighboring countries, the role of foreign trade has been steadily increasing. Naturally, relations between states were not always favorable, and there were periods of tension that did not facilitate trade exchanges. But the general tendency to increase the volume of interstate trade relations continued.

During the XX century, world trade as a whole developed at a fairly high pace - up to 3.5% per year. The exceptions were the periods after the First and Second World Wars and the time of the Great Depression. After World War II, a particularly strong growth in foreign trade was noted. This is quite natural, because after a period of global destruction, a huge amount of effort had to be made to restore the destroyed economies.

The main way to do this was to redistribute resources from countries least affected by the hostilities. Until 1974, global export operations grew annually by approximately 6%. To a large extent this was facilitated by the transition to the Bretton Woods monetary system, the Marshall Plan and the formation of the World Trade Organization.

For a better understanding of the further development of world foreign trade, it is worthwhile to dwell on them in more detail.

Bretton Woods monetary system

The Bretton Woods system or, as it is also called, the Bretton Woods agreement is an international system of monetary relations and the organization of settlements between countries, formed as a result of the 1944 conference held in the small resort town of Bretton Woods (New Hampshire, USA).

In fact, the end date of the conference can be considered the founding date of such well-known international financial institutions as the IMF and IBRD.

We can distinguish the principles adopted in international foreign trade following the results of this conference:

1. The fixed price of gold is $ 35 / oz.
2. Approved solid exchange rates of member countries against the US dollar, which has become the key currency.
3. The central banks of the participating countries pledged to maintain a stable exchange rate of their own currencies against the US dollar. For this, a mechanism of currency interventions was developed.
4. Changes in exchange rates are permissible only through devaluation and revaluation of national currencies.

Marshall Plan

The Marshall Plan is the common name for the “Restoration of Europe Program” at the end of World War II. Named for US Secretary of State George C. Marshall, who nominated him in 1947.

17 European countries fell into its coverage area. His main tenets are as follows:

• economic recovery in Europe;
• removal of trade restrictions between countries;
• modernization of industry in Europe;
• development of Europe as a whole.

world Trade organisation

The World Trade Organization was established in January 1995.

It was actually the successor of the GATT (General Agreement on Tariffs and Trade), which existed since 1947 and actually performed the role of an international regulatory organization, although this was not legally formalized. The main functions of the WTO:

1. Development of new trade agreements.
2. The implementation of the developed agreements in the interstate relations of the participating countries.
3. Monitoring compliance with agreements.

Since the formation of these mechanisms, foreign trade began to change dramatically. The subordination of a large number of national economies, including the largest at that time, to the unified rules for the functioning of foreign trade, could not but lead to a sharp increase in it. In the end, it happened. After that, serious growth rates of foreign trade operations declined only once - in the mid-80s. This was due to the oil crisis.

Foreign trade turnover structure

The main volumes of foreign trade are export-import operations in the following groups of goods:

• hydrocarbons;
• minerals;
• food products;
• machinery and equipment;
• services in various fields.

In general, it can be noted that over half a century after the end of World War II, world exports grew more than 100 times - up to $ 2.5 billion.

The fact that the world economy has begun to have a much greater bias towards foreign trade operations can be seen by comparing the growth rates of the main national economies and their export operations. On average, export growth from the country was 1.5 times faster than overall economic growth.

If we talk about the second component of foreign trade - imports, then we can say that the growth of its share in the volume of finished goods and services over the same period increased by about 3 times. And if the state is not aimed at artificial isolation from the world market, then its trend in foreign trade operations will coincide with the global one.

Basic concepts

Foreign trade turnover is the summation of a country's exports and imports. Export shows the number of goods and services exported outside the country. Import, respectively, - imported into the country. Due to the heterogeneity of positions that cannot be compared in physical volumes, the foreign trade turnover is estimated in value units.

There are several most significant concepts of foreign trade:

1. The balance of foreign trade operations.
2. The growth rate of exports / imports.
3. Export / import quota.

Foreign trade balance - the difference between export and import. It can have both positive and negative values, depending on the volumes of the respective flows. In accordance with this, they speak of a positive or negative balance in the trade balance of the state. Another name can be used to describe such situations - active and passive trade balance.

The growth rate of exports / imports shows the percentage change in the studied flow relative to the base period. It can be calculated at any comparable time intervals.

Export and import quotas are used to assess the country's dependence on foreign trade. In this case, the share of exports or imports in the total GDP (gross domestic product) of the state is calculated.

Foreign trade turnover of Russia

Russia's foreign trade is based on the same principles as international. There are exported goods and services, there are imported ones. In foreign trade, export consists of several large groups:

• hydrocarbons (oil and oil products, gas and coal);
• metals and finished products from them;
• cars and equipment;
• chemical products;
• food products and agricultural products.

It is worth noting that since 2016, non-resource exports in commodity terms increased by 9.8%, in value - by 22.5%. The export of products of the IT industry has grown to significant values. This mainly concerns software and antivirus products.

Import of foreign trade is represented by the following items:

1. Cars and equipment.
2. Pharmaceutical products.
3. Plastic and articles thereof.
4. Groceries (fruits, meat and offal, dairy products, alcohol products, vegetables).
5. Computer engineering and spare parts.

The total foreign trade of the Russian Federation in 2017 reached $ 584 billion. The increase from 2016 amounted to 25%.

The increase in exports - 357 billion US dollars (25%), imports - 227 billion dollars (24%).

We can say that the gradual exit of the Russian economy from the crisis and the easing of tension in international relations instantly yielded an effect in the form of an increase in the volume of foreign trade turnover. This confirms the thesis that the political and foreign economic spheres are directly related. A change in one is immediately reflected in another. Such is the modern world order, and this must be reckoned with.