1. INTRODUCTION

Theories of international trade appeared to answer the question of why countries trade with each other, as well as other questions about what a country produces, what will export, and at what cost, what profits are generated by international trade, and how they are allocated between countries.

Foreign trade is characterized by the transition of the trade-political border of a particular region or country. Geographical and cultural distances between countries are permanently reduced due to the expansion of technical and technological development, enabling companies to significantly expand the market and sources of raw materials.

International trade flows are of great importance from the standpoint of the development of economies and regions. In a way, they can be considered as the crucial factor of the economic growth of a particular economy. No economy can build its growth on the self-sufficiency of real and financial resources, and therefore it resorts to international trade, where the final balance reflects the degree of growth and macroeconomic variables of an economy. Thus, the import of certain products and services into a country is adversely affected by the external trade balance and requires the engagement of financial resources for its coverage, causes an increase of debt, affects the exchange rate, and through prices of imported products has an impact on inflation in that country. Conversely, the export of products and services enhances the level of resource utilization in a country, financial resources are provided without the growth of indebtedness with some other benefits that consequently arise within the domestic economy. These are just some of the implications that international trade flows can have on a particular economy (Balšić, 2014).

​

​

2. REVIEW OF SCIENTIFIC LITERATURE

International exchange is due to (and under the influence of) the difference in comparative costs. Why are different comparative advantages between countries? The Swedish economist, Eli Heckscher, tried to answer this question in 1919, and then his student Bertil Olin (Bertil Ohlin) in 1933. Their study was supplemented by American economist Paul Samuelson (Paul Samuelson), and this is why this theory is called the Heckscher-Olin-Samuelson model (the so-called H.O.S. model). This theory belongs to the neoclassical theory of international trade and is called the standard theory of international trade.

These scientists have proven that by applying the theory of comparative advantages, more expensive domestic products are replaced by cheaper imports and that domestic products are more expensive to sell in the world than on the domestic market. The most successful representative among these economists is Swedish Bertil Olin, winner of the Nobel Prize for Economics for 1977. He presented his views in the Interregional and International Trade section.

​

Olin did not completely reject Ricard's conception but accepted the theory of comparative costs (Ohlin, 1933). However, he noticed differences by comparing certain types of costs in individual countries, depending on which production factors each of them has. Abundant factors are relatively cheap, and scarce factors are rallying more expensive in every part of the world. Goods that require a lot for the first production, and a bit of that long, are exported in exchange for goods looking for factors in reverse (opposite) proportions. And, therefore, indirect factors that are abundantly exported, and factors that are scarce in the offer, are imported. (Rybczynski, 1955).

American economist Paul Samuelson supplemented Olin's theory by introducing differences in taste and demand. He asked whether the trade would come to be between two countries where production costs and prices are identical (Samuelson, 1948). In his opinion, the store will also come in that case, because there are differences in tastes in individual countries. He cited the example of Norway and Sweden, which can produce fish and meat at roughly the same costs. However, since the Swedes prefer meat and Norwegian fish, they will export fish from Sweden to Norway, and vice versa, to the export of meat from Norway to Sweden (Samuelson, 1949)

3. RESEARCH METHODOLOGY

In this research, we have used the methods of dynamic analysis to investigate and analyze the changes in the phenomenon during the time. In the analysis of time series (Resić, 2012), the following methods are commonly used: graphic method, index number method, and the average annual rate of change of trend method. The graphic method (line and staircase graphics) is a very useful tool, which provides a general picture of the data of a time series that becomes concise and transparent.

​

The method of index numbers is very important in dynamic analysis. They express relative changes in time. They are calculated by comparing the level of the phenomenon of one period with the magnitude of the occurrence in another period.

​

We distinguish the base index numbers (index numbers with a fixed base) by comparing all the members of the time series with one of its members. The member with which we compare is the basis of the comparison, then chain index numbers (index numbers with a variable base) if each member of the time series is compared with the previous member of the string. When the geometric mean of chain indexes is reduced by 100, we get the average annual rate of change based on which we can make projections.

The trend method is used to monitor the long-term development of the phenomenon. The trend implies the basic flow of the movement of the phenomenon over a longer period, as a legitimate (average) movement when the changes of the phenomenon are even.

The smallest square method provides the ability to determine the model that will most adequately express the movement of the given phenomenon and is reduced to finding a mathematical function whose values ​​are the closest to the values ​​of the time series that is the subject of the analysis. We proceed from the assumption that the observed series best approximates a function whose deviation from this series is minimal (the sum of the deviation squares is the smallest). Therefore, it is a specific form of a regression model where time is an independent variable.

​

​

4. EMPIRICAL DATA AND ANALYSIS

When we observe the trend of the development of World Trade by regions and countries for the period from 1948 to1999, we can notice that the growth of the value of imports follows the growth of the value of exports and that they have predominantly a tendency of growth from year to year. The countries of the General Agreement on Tariffs and Trade / World Trade Organization (GATT / WTO) and Western Europe are the leaders of import and export and occupy the largest share in world trade of goods for the specified period.

​

Table no. 1, made by authors based on the WTO statistics (International trade statistics, 2000) shows that Asia has overtaken North America in exports since 1983, while before that year, North America had primacy in exports. Also, we can conclude that the Six East Asian trader countries (Taiwan (China), Hong Kong (China), Malaysia, South Korea, Singapore, Thailand) from 1963 until 1999 lagged behind Japan in exports despite the previous indicators. When it comes to imports, the Six East Asian trader countries are leading in imports compared to Japan since 1993. Asia from 1983 to 1993 had a growing tendency of import, while North America after that period assumed the role of the "import leader" which had before 1983. From the other regions, Australia and New Zealand in 1999 had the least import share of 1.5% and exports of 1.3% .

​

​

​

​

​

Table no. 1: World trade of goods by regions and countries 1948-1999 (in bln. $ and %)

​

One of the indicators of the role of external trade is the relation between the value of exports and imports according to the total GDP. On a global scale, this indicator is over 40%. Almost in all EU countries, annual export and import volumes exceed 50% of GDP. Only in the US and Japan, the foreign trade quota is lower (around ¼ GDP in the US and around 1/5 of GDP in Japan). In the second half of the twentieth century, world trade achieved much faster growth than world GDP, especially per capita. For 1950-1995. GDP of the world grew by 6 times, industrial production by 7.4 times, and merchandise exports by 12.8% (at constant prices), while at the same time the growth of world GDP per capita was considerably more modest (1.4%). At the end of the 20th century, the highest GDP revenues were made by the United States, which was a symbol and an example of world trade throughout the XX. (United Nations Development Program, 2001).

​

Table no. 2: GDP in the world's largest economies in 1999 (billion USD)

Table no. 2 made by authors based on the United Nations Development Program (2001) presents GDP in the World’s largest economies in 1999 year. At the end of the 20th century, the US had the largest GDP in the world with 8,710 bln. USD. The US is followed by Japan and European Union countries (Germany, France, UK, Italy). China, as a developing country, had the largest GDP in the world.

​

Through dynamic analysis, we will show if there is a significant difference between imports by regions and developed countries for the period 1980-1999 years.

​

Chart no. 1 shows the structure of import values ​​by region for the period 1980-1999 years, based on the WTO statistics (International trade statistics, 2000). Here we can see comparative statistics of several independent variables during the observed period. In the period from 1980 to 1999, the import of goods by region and developed countries varies from year to year. Chart no. 1 presents that total commodity trade tends to grow from 1980 to 1998, while this growth is most significant for Six East Asian traders during the analyzed period. It should also be noted that China had a significant increase in imports in 1998 and 1999 compared to 1980 and 1990.

​

In the Chart no. 2, formed on the WTO statistics (International trade statistics, 2000) we can see the evolution of imports of goods by region. At the same time, in this chart, we can highlight that Western Europe and the Six East Asian traders dominate the total commodity trade during the analyzed countries and regions.

​

To determine the significance of the differences between imports by countries and regions, and over time, the base and chain indices will be used in the continuation of the research.

​

The index is calculated based on the charts no.1 and no.2 by the formula: I(bi)= Yi/Yo*100.
 

Table no. 3. Calculation of base index numbers for import movements

by countries and regions for the 1980-1999 period

Chart no. 4, designed based on WTO statistics (International trade statistics, 2000) shows that for the period 1980-1999. Western Europe and North America had the largest share in total trade in exports when it comes to trade, followed by Six East Asian traders and Japan.

​

Chart no. 5 shows the evolution of exports by region using the International trade statistics (2000). Analyzing the evolution of exports for the observed period, we can notice that exports of total commodity trade are on a constant increase from year to year. Also, we can see that the situation is the same with North America, Six East Asian Trader Countries, and China. In 1980, Japan recorded the highest export value, and each following year exports declined. Western Europe recorded the highest export value in 1990, while Australia and New Zealand in 1999 had the highest export value.

Table no. 6. Calculating base indexes numbers for export trends by country of export movement numbers

by country and regions for the 1980-1999 period

​

Chart no. 7 shows the movement of the average annual rate of change in imports and exports based on the International trade statistics (2000). We see that in each country/region, exports are from year to year.