INTERNATIONAL TRADE

 

 

The term 'Trade' refer to exchange of goods and services... 

What is International Trade?

 International Trade allows nations to grow their business sectors and access products and ventures that in any case might not have been accessible locally.
As a result of international trade, the market is more competitive. This ultimately results in more competitive pricing and brings a cheaper product home to the consumer.

 

 Importance of International Trade :

•  International Trade enables the fuller utilization of resources. Underdeveloped countries are not in a position to use their mineral resources, so they export their raw materials to developed countries where the same are needed the most.

•  Because of International Trade the trading partners gets goods cheaper than otherwise. Because every country produce those goods in the production of which it has to occur less comparative cost.

•  By virtue of International Trade consumers gets an opportunity to consume a large variety of goods produced by different countries. This improves the quality of life.

• International trade enables every country to dispose off their surplus production. Some countries produce more than their own requirement. They sell this surplus production in other countries and avoid the occurrence of deflationary pressures in the domestic economy.

• International Trade encourages countries to compete with each other in the production of different kinds of goods at low cost of production. Competitiveness stimulates productivity.

•  It widens the extent of market. Every country makes an attempt to produce different goods in large quantity. This induces production on large scale and thereby generates economies of scale.

•  International Trade stimulates the spirit of competition among the entrepreneurs. Novel techniques of production are devised to produce quality goods at low cost. Advancement of technology is the key to economic development.

•  International Trade promotes mutual cooperation among different countries. It creates an atmosphere of goodwill and friendship among the trading countries.