Why did the trade change since the 1950´s?

The world trade today is about 80 times bigger than in the year 1950.  Extraordinary the trade has grown even way more than the world´s output, called GDP. GDP stands for Gross Domestic Product and includes the total value of all Goods and Services produced in an Economy.

What are the reasons for this longterm upward trend?

In my opinion there are many little reasons for this trend, which have together as a whole a big influence to this fact. To become an easier overview, the little reasons can be categorized into 3 main groups:

  • Lower costs for transportation and trade
  • Higher incomes of each person
  • Companies productivity is improving steadily

Lower costs for transportation and trade: There are many points, which had influence to the costs for transportation and trade.  For example Unit Loads like standard sized boxes, pallets or containers made it much easier and faster handling them at the harbour or to load and reload the ships.  Another thing is technical improvement of ships, lorries and airplanes. Over the years their capacity has been rising and technical improvement made them faster. New supply routes at the sea like the Panama Canal or interurban with better infrastructre also had a big effect to lower the transportation costs.  (time = money = success)

Higher incomes of each person: Economic stability makes the people spending their money more easily. At least if the economy is healthy and growing, there will be a smaller unemployment rate. The people will earn more money, and so they have more money to spend. Besides that another trend is that if people have money, they spend it on more expensive and exclusive goods. That´s why the boom in emerging economies like India, China and Russia and the concluding rising demand had a big influence on the increase of trade.

Companies productivity is improving steadily: New logistic concepts like JIT (Just In Time) and JIS (Just In Sequence), as well as the automatization made the productions much more efficient and as a result cheaper. If companies can increase their production, the product price is tending to fall as a result of the higher output. The lower price makes it possible to sell the products in further locations. The money safed by producing, could now be spend on transportation which has an influence on trading goods.

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One Response to “Why did the trade change since the 1950´s?”

  1. josepe Says:

    Pls, do not use coloring to the text.. unless there are links connected. Colouring text is an standard message for : there is something more. Great posts anyway.

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