International trade & risk
Les 1
The phrase "The world is shrinking" = refers to how advances in technology, communication, and
transportation have made it easier for businesses and people to connect across borders, making the
global economy more interconnected.
Technological innovations=> in 1) transport and 2) communication have made trade faster, cheaper,
and more efficient
1. Ex in transport:
- Containerization= the use of shipping containers revolutionized global trade by
standardizing transport and reducing cost
- commercial jet travel= faster and cheaper air travel enables businesses to trade and
connect globally.
2. Ex in communication:
- digital platforms (teams, zoom,) = people can now communicate instantly across countries
- ERP systems (enterprise resource planning)= companies can integrate supply chains and
manage operations across multiple countries in real time.
* Effect? => these innovations make long distance trade easier, leading to increased global economic
integration
Remark 1: Increase in Inequality, but a Decrease in Absolute Poverty
=> inequality is rising (= gap between rich and poor is growing), absolute poverty has decreased (=
before covid-19 fewer people than ever were living in extreme poverty), covid-19 has changed this
trend-> the impact of the pandemic hit poorer countries the hardest, leading to increase of poverty
again
Remark 2: Can We Maintain Growth in a Sustainable Way?
=> economic grow has environmental and social costs
Examples of unsustainable growth:
- climate change & pollution (= increase of co2 emissions)
- resource depletion (= overuse of natural resources harms ecosystems)
- social impact (= some industries exploit workers= sweatshops)
The triple bottom line 3p’s approach:
People: fair wages, ethical working conditions
Planet: reducing environmental damage
Profit: making money but in a sustainable way
* Kate Raworth’s doughnut economy=> growth should not only be measured by GDP, there should be
a balance between social well-being and ecological limits.
-> economic growth should balance profit with sustainability and social fairness.
,Remark 3: Since 2016, there has been a renewed increase in protectionism
Protectionism= governments restricting trade (ex: tariffs, subsidies, import bans)
*Global trade was becoming more open, but since 2016, more countries are adopting protectionist
policies
Examples
- US-Chine trade war: the US imposed high tariffs on Chinese goods
- EU’s restrictions on Chinese electric cars: to protect European manufacturers
- covid-19 lockdowns: borders were closed to ensure vaccines and medical supplies
- Russia- Ukraine war: many countries stopped trading with Russia
=> countries are becoming more protective of their economies, leading to a slowdown in
globalization
Key economic theories on trade:
- Adam Smith’s theory of absolute advantage: countries should specialize in producing goods they are
most efficient at producing (the doctrine of laissez-faire applied to international trade)
- David Ricardo’s theory of comparative advantage: even if a country is less efficient in producing
everything it should focus on what it produces relatively better and trade the rest.
- Immanuel Wallerstein’s world systems theory: the global economy is divided into core (=
developed), periphery (=developing), and semi periphery countries, with rich nations benefiting the
most. (=> core countries are economically dominant, and periphery countries are economically
disadvantaged, semi falls in between)
World trade trends
Long-terms trends (last 50years)
- massive trade growth: since 1950 world trade volumes has grown by 4220%
- rise of global supply chains due to technological innovations (transport digital communication)
- economic shift towards Asia, especially China and India
Recent trends (last 5 years)
- covid19 impact: led to slowdowns, border closures and disruptions in supply chains
- Russia- Ukraine war: caused economic and political tensions increasing protectionism
- current state of the world economy: globalization (= globalization is slowing down, and countries are
focusing more on local and regional trade.
,Major players in world trade:
- China: leading exporter of goods, though its growth slowed down after COVID-19
- USA: the largest economy & leader in service exports
- Germany: Europe’s top exporter
-BRICS countries (Brazil, Russia, India, China, South Africa): growing trade influence, but still behind
the US & EU.
Challenges in world trade:
- protectionism: countries are imposing tariffs
- Supply chain disruptions: companies and governments are reshoring production to reduce
dependency on foreign suppliers
- Sustainability issues: trade growth needs to be balanced with environmental concerns
• Important conclusions:
- Belgium’s position has decreased, but we are still doing well in terms of import and
export, both for goods and services
- Globalisation is descreasing. Before 2020, all eyes were on China and the Far East in
general, but interdependency with those countries is slowing down
- Countries like Mexico, Brazil and South Africa are mayor players in their own region
but are relatively small from a global perspective.
- US import value very large in comparison with other countries – trade deficit
- Current state of the world economy: “slowbalization”?
Belgium’s status in international trade (starting dia 40)
* Belgium= big role in international trade=> due its strategic location, open economy and
strong logistics infrastructure.
Key Facts About Belgium’s Trade (2023)
12th largest exporter of goods worldwide
13th largest importer of goods worldwide
5th largest exporter in Europe (behind Germany, Netherlands, France, and Italy)
Trade surplus: Belgium exports more than it imports, meaning it has a strong economy based on processing goods.
🔹 Question from the PowerPoint: Why do you think Belgium ranks high in trade despite its small size?
➡ Answer: Because of its central location in Europe, strong transport infrastructure, and open trade policies.
Why is Belgium an important trading nation?
1) Open Economy
Belgium relies on importing raw materials, transforming them, and exporting finished products.
Examples:
Oil: Belgium doesn’t produce crude oil but refines it and exports refined petroleum.
Pharmaceuticals: Belgium produces vaccines and medicines for global export.
, 2) Gateway to Europe
Strategic location: In the center of the European Union, close to Paris, London, and Frankfurt.
More than 500 million wealthy consumers are within easy reach.
Low trade restrictions within the EU make it easy to import and export goods.
3) world-Class Infrastructure
Belgium has one of the best transport systems in the world:
- Port of Antwerp: 2nd biggest port in Europe, Handles massive international trade, especially
chemical and petrochemical industries.
- Airports: Brussels & Liège airports are in the Top 10 in Europe for cargo transport.
- Road & Rail Network: 3rd most dense motorway network in Europe. 2nd most dense railway system
in Europe.
- Inland Waterways: Rivers like the Scheldt and the Meuse connect Belgium to the North Sea and
beyond.
A healthy trade balance
=A country’s trade balance (or balance of trade) is the difference between exports and imports of
goods and services in that country.
Disbalance:
Trade surplus: export > import
> Positive: competitive
> Negative: possible indication of inadequate domestic growth
Trade deficit: import > export
> Positive: may indicate investment in building economy
> Negative: can lead to dependence on foreign funding
*Belgium: trade surplus=> more exports than imports (= strong economy) its trade balance is
manifestly positive
Main exports:
Pharmaceuticals (medicines, vaccines, blood, antisera, toxins and cultures)
Chemicals (important for industrial production)
Refined petroleum
Diamonds
LNG (liquid gas) to the rest of Europe via the harbour of Zeebrugge
Main imports:
Raw materials (oil, minerals, metals)
Food
Clothing
*Key Idea: Belgium imports raw materials, processes them, and exports high-value goods.
Les 1
The phrase "The world is shrinking" = refers to how advances in technology, communication, and
transportation have made it easier for businesses and people to connect across borders, making the
global economy more interconnected.
Technological innovations=> in 1) transport and 2) communication have made trade faster, cheaper,
and more efficient
1. Ex in transport:
- Containerization= the use of shipping containers revolutionized global trade by
standardizing transport and reducing cost
- commercial jet travel= faster and cheaper air travel enables businesses to trade and
connect globally.
2. Ex in communication:
- digital platforms (teams, zoom,) = people can now communicate instantly across countries
- ERP systems (enterprise resource planning)= companies can integrate supply chains and
manage operations across multiple countries in real time.
* Effect? => these innovations make long distance trade easier, leading to increased global economic
integration
Remark 1: Increase in Inequality, but a Decrease in Absolute Poverty
=> inequality is rising (= gap between rich and poor is growing), absolute poverty has decreased (=
before covid-19 fewer people than ever were living in extreme poverty), covid-19 has changed this
trend-> the impact of the pandemic hit poorer countries the hardest, leading to increase of poverty
again
Remark 2: Can We Maintain Growth in a Sustainable Way?
=> economic grow has environmental and social costs
Examples of unsustainable growth:
- climate change & pollution (= increase of co2 emissions)
- resource depletion (= overuse of natural resources harms ecosystems)
- social impact (= some industries exploit workers= sweatshops)
The triple bottom line 3p’s approach:
People: fair wages, ethical working conditions
Planet: reducing environmental damage
Profit: making money but in a sustainable way
* Kate Raworth’s doughnut economy=> growth should not only be measured by GDP, there should be
a balance between social well-being and ecological limits.
-> economic growth should balance profit with sustainability and social fairness.
,Remark 3: Since 2016, there has been a renewed increase in protectionism
Protectionism= governments restricting trade (ex: tariffs, subsidies, import bans)
*Global trade was becoming more open, but since 2016, more countries are adopting protectionist
policies
Examples
- US-Chine trade war: the US imposed high tariffs on Chinese goods
- EU’s restrictions on Chinese electric cars: to protect European manufacturers
- covid-19 lockdowns: borders were closed to ensure vaccines and medical supplies
- Russia- Ukraine war: many countries stopped trading with Russia
=> countries are becoming more protective of their economies, leading to a slowdown in
globalization
Key economic theories on trade:
- Adam Smith’s theory of absolute advantage: countries should specialize in producing goods they are
most efficient at producing (the doctrine of laissez-faire applied to international trade)
- David Ricardo’s theory of comparative advantage: even if a country is less efficient in producing
everything it should focus on what it produces relatively better and trade the rest.
- Immanuel Wallerstein’s world systems theory: the global economy is divided into core (=
developed), periphery (=developing), and semi periphery countries, with rich nations benefiting the
most. (=> core countries are economically dominant, and periphery countries are economically
disadvantaged, semi falls in between)
World trade trends
Long-terms trends (last 50years)
- massive trade growth: since 1950 world trade volumes has grown by 4220%
- rise of global supply chains due to technological innovations (transport digital communication)
- economic shift towards Asia, especially China and India
Recent trends (last 5 years)
- covid19 impact: led to slowdowns, border closures and disruptions in supply chains
- Russia- Ukraine war: caused economic and political tensions increasing protectionism
- current state of the world economy: globalization (= globalization is slowing down, and countries are
focusing more on local and regional trade.
,Major players in world trade:
- China: leading exporter of goods, though its growth slowed down after COVID-19
- USA: the largest economy & leader in service exports
- Germany: Europe’s top exporter
-BRICS countries (Brazil, Russia, India, China, South Africa): growing trade influence, but still behind
the US & EU.
Challenges in world trade:
- protectionism: countries are imposing tariffs
- Supply chain disruptions: companies and governments are reshoring production to reduce
dependency on foreign suppliers
- Sustainability issues: trade growth needs to be balanced with environmental concerns
• Important conclusions:
- Belgium’s position has decreased, but we are still doing well in terms of import and
export, both for goods and services
- Globalisation is descreasing. Before 2020, all eyes were on China and the Far East in
general, but interdependency with those countries is slowing down
- Countries like Mexico, Brazil and South Africa are mayor players in their own region
but are relatively small from a global perspective.
- US import value very large in comparison with other countries – trade deficit
- Current state of the world economy: “slowbalization”?
Belgium’s status in international trade (starting dia 40)
* Belgium= big role in international trade=> due its strategic location, open economy and
strong logistics infrastructure.
Key Facts About Belgium’s Trade (2023)
12th largest exporter of goods worldwide
13th largest importer of goods worldwide
5th largest exporter in Europe (behind Germany, Netherlands, France, and Italy)
Trade surplus: Belgium exports more than it imports, meaning it has a strong economy based on processing goods.
🔹 Question from the PowerPoint: Why do you think Belgium ranks high in trade despite its small size?
➡ Answer: Because of its central location in Europe, strong transport infrastructure, and open trade policies.
Why is Belgium an important trading nation?
1) Open Economy
Belgium relies on importing raw materials, transforming them, and exporting finished products.
Examples:
Oil: Belgium doesn’t produce crude oil but refines it and exports refined petroleum.
Pharmaceuticals: Belgium produces vaccines and medicines for global export.
, 2) Gateway to Europe
Strategic location: In the center of the European Union, close to Paris, London, and Frankfurt.
More than 500 million wealthy consumers are within easy reach.
Low trade restrictions within the EU make it easy to import and export goods.
3) world-Class Infrastructure
Belgium has one of the best transport systems in the world:
- Port of Antwerp: 2nd biggest port in Europe, Handles massive international trade, especially
chemical and petrochemical industries.
- Airports: Brussels & Liège airports are in the Top 10 in Europe for cargo transport.
- Road & Rail Network: 3rd most dense motorway network in Europe. 2nd most dense railway system
in Europe.
- Inland Waterways: Rivers like the Scheldt and the Meuse connect Belgium to the North Sea and
beyond.
A healthy trade balance
=A country’s trade balance (or balance of trade) is the difference between exports and imports of
goods and services in that country.
Disbalance:
Trade surplus: export > import
> Positive: competitive
> Negative: possible indication of inadequate domestic growth
Trade deficit: import > export
> Positive: may indicate investment in building economy
> Negative: can lead to dependence on foreign funding
*Belgium: trade surplus=> more exports than imports (= strong economy) its trade balance is
manifestly positive
Main exports:
Pharmaceuticals (medicines, vaccines, blood, antisera, toxins and cultures)
Chemicals (important for industrial production)
Refined petroleum
Diamonds
LNG (liquid gas) to the rest of Europe via the harbour of Zeebrugge
Main imports:
Raw materials (oil, minerals, metals)
Food
Clothing
*Key Idea: Belgium imports raw materials, processes them, and exports high-value goods.
