Name three economic factors that influence international trade.

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thetall eNotes educator| Certified Educator

Three factors that influence international trade include:

  • Demographic change
  • Technology
  • Energy and other natural resources

Changes in demographics which include age, gender and income in the global economy directly impact international trade. For instance, a country’s ability to provide adequate labor is directly affected by the age of the majority within the population. An aging population would produce less which would lead to a decrease in their capacity to export their local products.

Advancement in technology affects international trade through knowledge transfer and the improvement in operational efficiency. The technological differences between different countries and regions also impact trade. Technology has resulted in the introduction of goods that challenge existing products, forcing countries to evaluate their output to ensure they remain competitive in the global market.

Research and development in green sources of energy and oil/gas exploration in developing countries is expected to impact international trade. This is because the new energy sources would improve the industrial capacity of developing countries and provide the developed countries with an opportunity to increase their production. Such developments are expected to influence international trade especially with regards to production.

pohnpei397 eNotes educator| Certified Educator

Depending on what you call an "economic factor" there are any number of such factors that influence international trade.

One is comparative advantage.  Countries tend to produce and export products for which they have a comparative advantage and to import products for which they do not.

Another is currency exchange rates.  This is one reason why America is constantly pressing China to allow its currency to float.  A country with a weak currency is in much better position to export than one with a strong currency.

A third is the extent to which government is involved in the market in any given country.  In some countries, the government is deeply involved in the economy. This can, at times, make it hard for firms to trade with that country if, for example, the government erects barriers to trade or if the government subsidises domestic industries.