International trade
•is the purchase and sale of goods
and services by companies in
different countries. Consumer
goods, raw materials, food, and
machinery all are bought and sold
in the international marketplace.
•allows countries to expand their
markets and access goods and
services that otherwise may not
have been available domestically.
As a result of international trade,
the market is more competitive.
•There are three different types of foreign trade,
:
•Import trade: It is the purchase of goods and
services by one country from another country. .
•Export trade: It is the selling of goods and
services to another country.
•Entrepot trade: This process is also called
re-export.
•Re-exportation, also called
entrepot trade, is a form of
international trade in which a
country exports goods which it
previously imported without
altering them.
•Examples of international trade include:
•Consumer goods: Clothing, electronics, and other
products that are bought by consumers
•Capital goods: Machinery and other products used in
production
•Raw materials: Food, oil, and other natural resources
•Services: Travel, banking, consulting, and
transportation
•Financial transactions: Payments for patents and
other financial services
•How can international trade affect the
economy?
International trade can impact the
economy in many ways, including
increasing efficiency, creating jobs, and
increasing competition.
•Increasing efficiency in international trade" means
optimizing the process of exporting and importing
goods and services between countries, allowing for
more goods to be produced and exchanged with the
same amount of resources, essentially getting more
value for less input, by leveraging comparative
advantages and specializing production based on
each country's strengths, leading to lower costs and
greater economic benefits for all involved parties.
Benefits
• Lower prices: Trade can lower prices and increase the variety of goods
and services available.
• Economic growth: Trade can lead to higher growth rates, more revenue,
and more job opportunities.
• Economic resilience: Trade can make economies more resilient by
diversifying supply chains.
• Foreign direct investment: Trade can encourage foreign direct investment
(FDI), which can lead to more jobs and economic growth.
• Higher living standards: Trade can lead to higher living standards and
more sales.
Importance of international trade
•Increases revenue: Companies can sell their
products to more people, which increases
profits.
•Expands markets: Companies can access new
markets and customers, which can lead to
longer product lifespans.
•Diversifies products: Companies can expand
their product lines and find new markets.
•Builds brands: Companies can build their brands and
increase their equity.
•Improves standards of living: International trade helps raise
living standards in developing countries.
•Enhances environmental quality: Products made in other
countries often use fewer natural resources than those
made at home.
•Creates jobs: International trade creates jobs and helps
people improve their standard of living.
•increases efficiency: International trade allows countries to
participate in a global economy, encouraging the
opportunity for foreign direct investment (FDI).
•Helps countries diversify their income sources: Countries
can reduce dependence on any industry or market by
exporting a wide range of products and services.
•Helps countries concentrate on producing goods and
services with a comparative advantage: Countries can focus
on producing goods and services that they are best at
producing.
Importance of international trade
•Access to export financing
•Decreased competition
•Access to resources
•Business growth
•Employment growth
•Global Growth
•Balance foreign exchange risks
•Better risk management
•Greater choice for consumers
•Longer product lifespan
•Opportunities to specialize
•Trade agreements
