Over the last 200 years economists
have developed an extensive
body of international trade
theory, and this is the starting
point for our discussion. However,
there are three significant differences
between the approach of
international economists and our focus as maritime economists. Firstly, maritime
economists are primarily concerned with the physical quantity of cargo, whilst trade
economists generally focus on the value of trade, which allows them to link their analysis
to the economics of the trading economies. Since high-value commodities often have
a low volume and vice versa, this inverts the importance of individual commodity trade
flows. For example, iron ore exports from Brazil at $45 per ton represent a lot of cargo,
but little value compared with manufactures at $20,000 per tonne. Secondly, maritime
economists are interested in the way the detailed commodity composition of trade
changes with economic circumstances while international economists are more interested
in broad categories of trade, for example primary commodities, and manufactures.
Thirdly, maritime trade analysis is more focused on geographical regions than political
nation states – for example, whether trade is from the US East Coast or West Coast.
None of this invalidates the body of trade theory, it simply changes the emphasis which
we will place on these different economic tools in the course of this chapter.