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Atrading nation (also known as atrade-dependent economy, or anexport-oriented economy) is a country whereinternational trade makes up a large percentage of its economy.
Smaller nations (by population) tend to be more trade-dependent than larger ones. In 2022, the most trade-dependentOECD member wasLuxembourg, where international trade was worth 384% ofGDP, while the least trade-dependent was theUnited States, where international trade made up 26% of GDP.[1]
Trading nations tend to favourfree trade andeconomic integration, or at least seekmarket access for their products (they may also seek some form ofprotectionism for their own industries). The most desired markets to access are thelargest ones.
In 2012, the Canadian news columnistAndrew Coyne described countries with free trade with both theEuropean Union and the United States as a "select group" that includesColombia,Israel,Jordan,Mexico,Morocco, andPeru. He describedSouth Korea,Chile, andSingapore as "buccaneering free traders" and the only countries to rivalCanada in "scale and scope of the trade agreements" that they had signed (roughly 75% of Canada's trade is tariff-free).
South Korea has a free trade agreement with the United States and India and is negotiating withChina and the European Union. Chile has free trade agreements with the United States, the European Union,Japan, China and Mexico but notIndia or South Korea. Singapore has agreements with the United States, Japan, India, China, and South Korea and is in negotiations with the European Union. Coyne argued that if Canada successfully completed agreements with the EU, China, and India, around 90% of Canada's trade would be tariff-free, and it would then make sense to unilaterally abolish any remaining tariffs.[2]
Small countries orcity-states that are extremely reliant on international trade are sometimes calledentrepôts, which typically engaged in there-export of products produced elsewhere or finance and services (seeoffshore financial centre). Modern examples includeHong Kong,Singapore, andDubai.
Both developed and developing countries rely on trade. Many developing nations pursue a policy ofexport-oriented industrialization, which they hope will lead toexport-led growth.
There are three types of exporting economies:commodity exporters, manufacturing exporters, and services exporters. Most countries, however, do not fall purely in one category.
Commodity exporters include countries with large deposits ofnatural resources or large amounts offarmland, with populations too small to use all their own resources. The trade of many commodity exporters is dominated by a single commodity. Mostleast developed countries are reliant on agricultural exports. A 1998 statistical review by theFood and Agriculture Organization showed that 32 developing countries relied on a single commodity for more than half of their agricultural export earnings.[3] Agricultural exporters are generally members of theCairns Group, a coalition of 19 countries thatlobby for more market access.Fossil fuel exporters, such theOPEC countries, are an important and influential subset of commodity exporters.
Manufacturing exporters include manydensely populatedcountries where human labour is the most important resource. They include wealthy countries such as Germany and Japan, as well as developing nations like China and India.
Services-exporting countries include hubs of internationalfinance,tourism,healthcare, andeducation. Manyhighly developed countries export services.
Some countries export all of commodities, manufactures, and services. For example,Canada is regularly described as a trading nation as its total trade is worth more than two-thirds of its GDP (the second highest level in theG7 afterGermany),[1][4][5] which includes all sectors of the economy.
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