Importance Of International Trade

Published: 27th May 2008
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International trade is that kind of trade that gives rise to the economy of the world. In this the demand and supply and the prices are affected by the global events. For example, the change in political conditions in Asia can increase manufacturing cost and cost of labor of an American company located in a country in Asia. This would then result in increase in the price of the product that you need to buy from a local mall. If there is a decrease in cost of labor, on the other hand then you may have to pay relatively less amount on the product.

Global trading provides countries and consumers the chance to be exposed to those services and goods that are not available in their own country. Clothes, food, jewelry, stocks, wines, spare parts etc. and many more products are available in international market. Trading of services is also done like: banking, consulting and transportation, tourism. The goods and services that are bought from the global market are called imports and the goods and services that are sold in the overseas market are called exports. Exports and imports are recorded in a country's balance of payments (current account).

International trading lets the developed countries use their resources effectively like technology, capital and labor. As many of the countries are gifted with natural resources and different assets (labor, technology, land and capital), they can produce many products more efficiently sell at cheaper prices than other countries. A country can obtain an item from another country if it cannot effectively produce it within the national boundaries. This is the specialty of international trade. Global trading allows the different countries to participate in global economy encouraging the foreign direct investors. These individuals invest their money in the foreign companies and other assets. Hence the countries can become competitive global participants.

International trading has become very important for every country of the world - be it big or small, developing nation or developed nation. The concept of globalization started way back 1980, developed due advancement of technology in areas transport and communication. Another encouraging aspect is that the poor and developing nations are trying hard to beat the competition and to satisfy the needs of the customers overseas. An increase from less than twenty five percent to eighty percent has been observed after the initiation of globalization. The major contribution is made by the countries like Hungry, China, Mexico, India and Brazil.

Simon Slade is
an online auction enthusiast and entrepreneur. In his spare time, href="http://www.netscape.com/member/simon_slade">Mr. Slade enjoys
hiking, sports and fitness.

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