International Trade
This page includes all the necessary information for understanding what is the International trade and how it works.
Definition:
International trade is exchange of goods and services between two countries.
We eat bananas from South America, drink coffee from Brazil and wine from South Africa; we wear clothes made in Chine, drive in a car made in Japan – you are expecting the effects of international trade.
As a result we have more products and services to choose from. Cars – Japanese, German, American and all this for more competitive prices. You can also buy and sell services: banking ,tourism, consulting and transportation.
A product that is sold in the global market is export, and bought from the global market is an import.
History
Before 19th century the trade before two nations or countries had high tariffs and many restrictions on international trade. At the end of the 19th century the new idea of free trade rise and soon till now days this idea has become as dominant thinking among western countries.
Since the second world war many regulations and organizations have been trying to create globally regulated trade structure which main aim is to create a mutually beneficial system. Most important organization now is ‘World Trade Organization’. As tariff levels fall there is constant increase of international trade.
Efficiency of international trade
Global trade allows countries to use their resources – whether labor, technology or capital – more efficiently. This means that products or services made in one country are cheaper than in other, because it is easier to make those there. This is because one of these factors: better and more land, cheaper labor, capital and developed technology. The effects of global trade is better for end user, because the goods are more affordable.
