Trading Zones of the World | Economic Geography

Here is a list of trading zones of the world:- 1. Western Europe 2. North America 3. Latin America 4. Africa 5. Australasia 6. U.S.S.R. and Eastern Europe 7. Asia.

1. Western Europe:

Western Europe is among the most industrialized and most densely-populated parts of the world. It leads all other regions in the annual volume of foreign trade. More than a third of the world’s trade is concentrated in the EEC alone and flows through such international commercial cen­tres as London, Paris, Rotterdam, Antwerp and Ham­burg.

There are several reasons for the large volume of trade in Europe:

(a) Because the continent is small but very densely populated there is a need for large imports of food­stuffs such as tea, coffee, cocoa, sugar and fruits.

Most of these come from former colonial territories in the tropics and southern continents but there is also a large trade in foodstuffs between the European countries themselves.

Thus Denmark exports bacon, eggs and dairy products to Britain; France exports wine and some wheat; Italy provides citrus fruits. There is also much inter-European trade in vegetables. Manufactured goods are also imported, especially from the U.S.A. and Japan.

(b) Because the continent is highly industrialized many minerals and raw materials must be imported such as cotton, wool, furs, jute, rubber, lumber, hides, tin, bauxite, copper, and so on. The most important mineral import is, of course, oil which is required in large quantities to power factories and homes.

Many of these imports come from underdeveloped coun­tries but others come from within Europe, e.g. iron from Sweden, Spain, France; timber from Scandina­via; coal from Poland; oil from Norway and the U.K.

(c) There is a high volume of exports of manu­factured and semi-finished goods such as machinery, automobiles, locomotives, ships, aircraft, chemicals, liquor, watches, precision instruments, electrical prod­ucts and canned foods. These go to less-developed countries to a large extent, but they are also ex­changed between European countries and with North America. Trade between Europe and North America is larger than between any other two trading zones.

(d) The value of manufactured goods is greater than that of foodstuffs or raw materials and, since much of European trade consists of such goods, the per capita trade figures are very high. Moreover, be­cause of the higher standard of living and higher pro­duction costs, European foodstuffs are also high-value goods.

(e) There are many countries in Europe, all within close proximity, which boosts trading links. Many European countries are interdependent, e.g. Germany relies to some extent on French and Swedish iron ore, while in turn it relies on other European countries to absorb its surplus manufactured goods such as auto­mobiles. The formation of the Common Market and the EFTA have stimulated trade still further between certain groups of countries by lowering tariffs.

(f) There is a large volume of entrepot trade by which goods are imported by one country for re-export to another either within Europe or further afield. Much of the trade of Rotterdam in the Netherlands, for example, is in goods destined for or derived from countries upstream along the River Rhine, especially West Germany.

2. North America:

The foreign trade of the North American region is next only to that of Europe. Since the First World War, increased industrialization has led to a change in emphasis from the export of raw materials to the export of manufactured goods. There are, however, strong contrasts between the U.S.A. and Canada in this respect.

Another feature of importance in North American trade is the very large volume of trade between the U.S.A. and Canada, as well as the very close trading links, as a result of long­standing cultural, historical and economic ;ties, with Europe.

The U.S.A. In terms of volume of trade, the U.S.A. is undoubtedly the greatest country in the world. The varied economy, rich mineral resources, rapid rate of industrial expansion, heavy overseas investments and liberal foreign aid to the underdeveloped countries, account for the large volume of exports.

The U.S.A.’s pre-eminent position in world trade has consequences far beyond its own shores. For instance, any recession in the American economy with a resultant reduction in imports from overseas, can drastically affect the exports of many other countries and lead to world­wide economic difficulties. Recession in America also affects the amount of money available for foreign aid and can thus affect many developing countries which depend on U.S. aid for their economic progress. On the other hand if the American economy is buoyant, world trade as a whole will benefit because the U.S.A. will provide a ready market.

The U.S.A.’s main trading partner is Canada. Other important trading links are with the Common Market, Japan, Venezuela, Mexico and Australia. The chief exports are machinery (industrial machinery and elec­trical apparatus in particular), iron and steel, auto­mobiles, aircraft, grains (wheat and maize), oil seeds, chemicals, petroleum and petroleum products, to­bacco, paper and pulp and fruits.

The U.S.A.’s imports are also varied, and include iron ore, timber, newsprint, nickel, asbestos and coal from Canada; oil, tin, bauxite, sugar, coffee, nuts and cocoa from the Caribbean and Latin American region; rubber, tin, copra, abaca and fruits from South-East Asia (Singapore and Malaysia in particular); wool, meat, dairy products and grains from the southern continents; manufactured and semi-­finished goods such as textiles and cars from Western Europe, Japan, Korea and Hong Kong.

Canada:

In the nineteenth century, Canada was a major exporter of primary products, mainly to the United Kingdom. The greatest dollar earners are still primary commodities. The greatest single export item is forest products (newsprint, timber, wood-pulp) which accounts for a third of the annual total. Next comes wheat and flour (16 per cent) and the many important minerals such as nickel, aluminium, iron ore, petroleum, copper, asbestos, zinc and uranium.

In recent years, manufactured products, e.g. auto­mobiles, iron and steel, aircraft and parts, industrial and farm machinery have assumed a greater role, due to greater industrialization and heavy American in­vestment in Canada. Canadian imports include motor vehicles and parts, machinery of all kinds, crude pe­troleum, coal, alloyed steel, cotton, wool, coffee, sugar, tea and fruits. Her largest trading partner is the U.S.A.

The other notable purchasers of Canadian goods include the EEC and other European nations, Japan, China, Australia and the Soviet Union. The distribution of Canadian trade reflects its close eco­nomic ties with the United States just across the border, and its close relationship with the original mother countries of the population, namely the United Kingdom and France.

3. Latin America:

The Latin American republics, which include the island-states in the Caribbean Sea, Central and South America are mainly producers of foodstuffs and raw materials and importers of manu­factured goods. Early British and later U.S. investment have assisted much in the development of the Latin American region, in such fields as mineral extraction, farming and the development of communication systems.

Most trade flows to Europe and North Ame­rica and intra-continental trade is comparatively poor­ly developed, partly because of natural barriers such as the Andes and Amazon forests, partly because of traditional rivalry between the various states, and partly because many of the states produce similar raw materials and all are striving to develop similar in­dustries, thus reducing the possibilities of exchange.

Argentina, noted for its meat, wool, hides and linseed exports; Brazil, which exports coffee, cocoa, and sugar; and Chile whose main exports are copper and sodium nitrate; are probably the best developed and have reduced imports of manufactures in recent years by developing their own iron and steel, motor vehicle assembly, machinery, chemicals, cement and textiles production.

The exports from the rest of South America are mostly minerals and tropical crops: tin makes up 70 per cent of Bolivia’s annual exports; copper, iron ore, silver, lead and zinc are extensively mined and ex­ported from Peru, though cotton and sugar-cane are also important. Venezuela is a notable oil producer.

Colombia exports some gold and is also the second largest world producer and exporter of coffee, while Ecuador produces a sizeable quantity of silver and gemstones as well as bananas and cocoa. Most coun­tries in the region are developing modern industries to replace imports from the industrial countries of the northern hemisphere, and there is also a tendency to greater processing of raw materials and the export of semi-finished metal goods rather than ores.

The Caribbean region is noted for its tropical food crops and raw materials: bananas, cane sugar, coffee, cocoa, hemp, tobacco and cotton. The increased agri­cultural output, especially of plantation crops, is mainly due to foreign investment, chiefly from Ame­rican and British sources as in the West Indian islands of Jamaica, Barbados, Hispaniola (Haiti, the Domi­nican Republic) and Puerto Rico.

At one time Cuba too enjoyed a large volume of U.S. investment, but American holdings were taken over after the Com­munist Revolution and the U.S.A. no longer trades with Cuba. Development in Cuba now relies on the U.S.S.R. for aid and trade.

In Central America, Mexico is most noted for its silver, gold, iron and uranium exports. Oil was first discovered in 1901 in the coastal plains of Tampico and Tuxpam and Mexico has found large reserves in recent years .some of which are exported. The other Central American states of Guatemala, Honduras, El Salvador, Nicaragua, Panama and Costa Rica derive their export earnings mainly from tropical foodstuffs and raw materials and some crude metallic ores and oil. The exports go mainly to the U.S.A. or Europe.

4. Africa:

The African states as a whole are little industrialized, though attempts to develop industries based on local resources are increasing. Minerals and tropical raw materials are the chief exports, mainly to industrial Europe and North America.

The chief im­ports are manufactured products, consumer goods and mining equipment which come largely from the former colonial European countries (Britain, France, Belgium, Portugal and Germany) and also lately from Russia, China and Japan, all of which have increased trade, given foreign aid or made large investments.

Ties with Europe are still very close in some African countries, and many African states are associate members of the Common Market. Most trade flows between Africa and the industrial nations of the northern hemisphere. As in Latin America, there is little intra-continental trade because of similarity of products.

The better-developed countries such as South Africa cannot promote intra-continental trade despite their greater economic development, since many countries reject trade with South Africa on political grounds.

South Africa does, however, supply many of the manufactured and consumer goods re­quired by some neighbouring states such as Lesotho, Botswana and Swaziland. It also has considerable in­vestments in these countries which are bound to be on good terms with South Africa, despite its racial policy, because they are near neighbours.

The main exports of South Africa to Europe and America are minerals, especially gold, but also dia­monds, platinum, asbestos, manganese and antimony. Wool, and citrus fruits, grapes and wine from the Mediterranean part of Cape Province are also impor­tant exports. Foreign trade is handled by the ports of Cape Town, Durban and Port Elizabeth. Zimbabwe produces mainly minerals and agricultural export crops especially tobacco.

The East African states of Kenya, Uganda, Tanzania and Malawi export mainly agricultural products, including coffee, cotton, sisal hemp, tobacco, hides, pyrethrum, tea, and cloves. Gold, mica, asbestos, tungsten, tin, chromium and es­pecially copper are exported from Zambia and Zaire. The export commodities of the West African states are mainly foodstuffs, raw materials and minerals.

They include palm and palm kernel oil from Nigeria, cocoa from Ghana, groundnuts from the more northerly areas such as northern Nigeria, Senegal, Gambia, and coffee from Ivory Coast. Tin, phos­phates, bauxite, manganese and iron ore come from a variety of countries, including Sierra Leone, Liberia, Nigeria and Mauritania, and much oil is exported by Nigeria. The trade passes through such major ports as Takoradi, Lagos, Port Harcourt, Freetown, Monrovia and Dakar.

The North African countries facing the Mediter­ranean Sea have the advantage of being close to Europe, especially France, which once controlled the greater part of the North African territories. Exports from North Africa include citrus fruits and almonds, as well as iron ore and phosphates from Algeria, Morocco and Tunisia.

The largest exports today, how­ever, are of oil and natural gas from Algeria and Libya. From Egypt and Sudan come high-grade cotton, dates, sugar, phosphates and coffee, which go through Port Said and Alexandria.

5. Australasia:

Like the other countries of the southern continents, Australia and New Zealand have a relatively small volume of world trade, comprising mainly agricultural products. Only in recent years have minerals loomed large in Australian exports. The export of manufactured products from Australia, is also on the increase. New Zealand’s exports are almost exclusively agricultural.

Both countries traditionally traded predominantly with the United Kingdom. British entry to the Common Market and the need for diversification of markets, has led to more trade with other countries. Japan takes many mineral exports from Australia, as well as wool. Australia and New Zealand both supply some manufactured goods to neighbouring countries in South-East Asia and the Pacific islands.

(a) Australia:

Wool is the leading agricultural ex­port; meat (beef and mutton or lamb), hides and dairy products (butter, cheese, milk) rank next in im­portance, followed by wheat, timber, cane sugar and fruits. Of the mineral ores, iron, bauxite, copper, lead, gold and, increasingly, coal are extensively mined and exported.

Exports of minerals are expected to con­tinue to rise while agricultural exports will probably remain stable. With the rise of industrialization, Australian-made goods such as automobiles, rail-cars, ma­chinery, chemicals and textiles are also gaining ground in international markets.

High tariff barriers protect Australian industries. Her imports of consumer goods, food-grains, beverages, tobacco, petroleum and es­sential raw materials come from many parts of the globe. The leading trading partners of Australia are the EEC, Japan, the U.S.A., New Zealand, Canada, Hong Kong and Malaysia.

(b) New Zealand:

Many of New Zealand’s exports are pastoral products, including butter, cheese, wool, lamb, beef, hides and skins, milk and cream. New Zealand’s main trading partner is Britain. Other trad­ing partners include Australia, the U.S.A., Canada, Japan, Germany and South-East Asian and Pacific island states. The greatest commercial centre of New Zealand is Auckland, the premier port with shipping routes to Hawaii and other Pacific islands that produce tropical crops. The port of Wellington handles about a third of New Zealand’s external trade.

6. U.S.S.R. and Eastern Europe:

The U.S.S.R. pursues a policy of self-sufficiency in most commodi­ties and has a small volume of trade for its size. Its main links are with other communist countries, es­pecially the East European countries, with which it is linked in a trading bloc called Comecon. About 60 per cent of the trade of the U.S.S.R. and East European countries falls within Comecon.

There are two main reasons for this, namely the slow growth of trade with the West for political reasons, and the desire of Russia to dominate the East European countries by integrating the economies of the various satellite countries tightly with its own economy.

Of the remaining trade of the communist countries, most is with Western Europe. Trade with the U.S.A. is minimal and that with Japan is also very small, though on the increase. Trading links with developing countries are either politically motivated, e.g. the U.S.S.R. imports most of Cuba’s sugar, or they are dictated by necessity, e.g. the U.S.S.R. must import rubber from Malaysia.

The commodities traded by the U.S.S.R. depend to a large extent on its trading partners. Towards the developing countries the U.S.S.R. adopts the stance of an advanced country, importing raw materials and exporting manufactured goods, but, in relation to Western Europe its level of development is relatively low and thus it imports so­phisticated machinery and manufactured goods and exports partly-processed raw materials, e.g. wood and pulp or simpler manufactured goods.

7. Asia:

Japan is the most important trading nation in Asia and has an extensive export and import trade with countries throughout the world. Its main exports are of manufactured goods, including steel, ships, tex­tiles’, electrical goods and machinery, automobiles and chemicals. Manufactured goods are sent to developing Asian countries, to Europe and to North America.

Imports include much oil from Middle Eastern coun­tries, and raw materials from a wide variety of sources, including minerals from Australia and South-East Asia, wool from Australia, and cotton, coal and timber from many sources. Japan has least trade with Africa and Latin America, but links with these regions are on the increase.

China’s foreign trade in most foodstuffs is greatly restricted by its large population, which consumes practically all of its agricultural output. China has some rice for export but has to import wheat, usually from Canada or Australia in bad years.

In recent years, manufactured goods have been the main exports, in­cluding some canned food, textiles, toys and cheap products of light industry. Its main markets are in Asia and Europe and greater trading links can be ex­pected in future with the more open policies cur­rently being adopted in China.

South-East Asia is assuming increasing importance as a trading zone, mainly because of the development of tropical raw materials and minerals. These include tin, timber, rubber, palm oil and petroleum from Ma­laysia; tin, rubber, oil and coffee from Indonesia; coconuts, sugar, abaca (Manila hemp), tobacco, chrom­ium and iron ore from the Philippines; rice, teak, rub­ber, tin and oil from Burma and Thailand; and oil from Brunei. Many of the plantations and mines are owned and operated by foreigners but worked by local labour.

Hong Kong’s major exports are of manufactured goods, however, including textiles and garments, toys and electrical goods. Singapore, another small state, is also heavily dependent on trade and industry. Its tra­ditional role as an entrepot centre is being overtaken by its industrial activities. In many other South-East Asian countries, especially Malaysia, light industries are assuming greater importance but are still on a small scale by world standards.

India and Pakistan have relatively little foreign trade because their minerals and crops are absorbed almost entirely by the large population. Some min­erals and agricultural products such as tea, cotton, jute and coconuts are exported as well as some manu­factured goods such as textiles and handicrafts. Sri Lanka exports tea and rubber.

The Middle Eastern states such as Saudi Arabia, Kuwait, Iraq and Iran are extremely important in world trade because the region possesses more than half of the world’s petroleum reserves. In many Middle Eastern countries oil represents between 85 and 95 per cent of exports.

Oil is in constant demand all over the world, and prices are rising rapidly. Thus the Middle Eastern countries can afford to import most of their requirements, though many of them are using their oil royalties to develop agriculture and industry and thus reduce imports.