a) Patterns

a) factors influencing the pattern of trade between countries and changes in trade flows between countries: comparative advantage, impact of emerging economies, growth of trading blocs and bilateral trading agreements, changes in relative exchange rates

pattern of trade = composition, direction, and volume of trade

trade creation = shifting from high-cost domestic production to low-cost member imports

trade diversion = shifting from low-costs non-member imports to high-cost member imports

comparative advantage

• composition + direction of trade changes

emerging economies

• introduction new comparative advantages

• increased import demand from the growing middle class

trading blocs

• trade creation

• trade diversion

exchange rate changes

• affect export/import prices

• affect the demand for exports/imports