International trade

nternational trade allows firms to compete in the global market and to employ
competitive pricing for their products and services. As more products become
available to the market, consumers meet their needs and satisfy their wants,
thus increasing customer satisfaction.
is the exchange of capital, goods, and services across international borders or
territories. It is the exchange of goods and services among nations of the
world. In most countries, such trade represents a significant share of gross
domestic product (GDP).
Significans
imply because there are no countries able to produce all the goods needed by
their people. And sometimes, it will be cheaper to import the goods rather
than to produce it
International trade is a very important part of an economy and if a country
wants to survive in this world so that country needs to work on its exports
need to work on all parts of trade which are interlinked with trade like the
fridge rate, trade policies and stable political environment.
International trade increase GDP of an economy, and when a country to
manage to develop a trading country it need to increase its exports because
when the exports are greater than imports it means GDP is increasing and the
country is becoming economically stable.
Even though many consumers prefer to buy less expensive goods, some
international trade is fostered by a specialized industry that has developed
due to national talent and/or tradition.
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 promotes mutual cooperation among different countries.
It creates an atmosphere of goodwill and friendship among the trading
countries
from products which can meet material comforts to tourism which can satisfy
the spiritual enjoyment, great changes have taken place in the commodity
structure of trade way. International trade has a very important position in the
international economic relations.
In addition, international trade has become an important content of national
political struggle, international trade policy has become a part of the country's
foreign policy.
Pros and cons of trade of international
The pros:

- Access to larger type and quality of goods and services

-Possibly obtaining the same goods and services at much cheaper prices

The cons:

-Ability for corporations to take advantage of legal anomalies; for example

what may be illegal in the United States is legal in Uzbekistan (such as
slavery, or child labor)

-Delays, risks (such as complete loss of items) and unknown factors that may
arise in multi-jurisdictional transactions
Pros and cons of trading blocs Benefits: 1.Increased competition.
2.Economies of scale. 3.Use of new technologies (as a consequence of 1).
4.Lower prices for consumers. 5.Increased investment: internal by firms from
a member country or external by outsider firms, which escape the tariff
imposed by the trading bloc on imports from outside.

10 6.Better use of factors of production. 7.Improved production efficiency,

allocative efficiency and greater economic growth (already mentioned).
8.Political advantages: Reduced likelihood of hostilities between countries
becoming increasingly interdependent and political cooperation resulting
from economic integration.

11 Disadvantages: 1.Trading blocs are a ‘second best’ solution, being

inferior to a complete elimination of trade barriers (=first best). 2.May create
obstacles for global free trade. Some economists believe that conflicts
between trading blocs might arise, difficulting the process of global
integration. 3.Unequal distribution of gains from trading blocs, as not all
members obtain the same benefit.

12 4.Gains may be limited if major trade links are with outside countries. For
instance, LDCs have strong trade links with DCs and more limited trade with
each other. What would be the gains of a trading bloc between LDCs
Advantages of International Trade
Better use of Resources. The producer try to control the cost by optimum
combination of factors of production. So there is no misuse of production
factors.
Economies of Larges Scale. The economies of production, transport,
management, finance and advertisement are available to the producers.
Cultural Diversity. The import and export of goods and services introduces
the taste and preference of one group of people to the rest of the world.
Monopoly. It eliminates monopoly, sometimes goods and services can be
important and surplus can be exported. In both cases the seller cannot create
monopoly in the market.
Employment Opportunities. When countries increase their export, the must
manufacture goods, which will required more human power.
Economic Development. Due to exports both the production and per capital
income increases which result in economic prosperity.
International Relations. It brings friendly relations with other countries,
which can lead to employment opportunities as well as educational
scholarship and many more.
Transfer to Technology. With the development trade relations they can
transfer improve method, machinery for inventions and innovation.
Price Stability. It is beneficial to keep prices stable as a result of supply of
goods in time. The surplus goods are exported and if faces shortage the goods
can be imported to maintain the price level.
World Peace. When countries involve in international trading, they want to
keep friendly relations with each other in order to increase the exports and
engage the manpower in the rest of the world which is a source of friend
remittances.
Disadvantages of International Trade
Local Industry Suffers. When countries import goods or services from other
counties. They are ready to use and cheap prices and local industry cannot
compete the quality or price, living example is Chinese products.
Excessive Use Natural Resources. After involving in international trade
market, countries want to export in bulk quantity. They must produce goods
in bulk which involve utilization of natural resources.
Shortage in the Local Market. For capturing market share, countries involve
to export too much as a result they face shortage in the local market and
notice hike in prices.
Unemployment. When the capitalists find that importing goods can give them
more profit then producing it in the local market, they prefer to import which
lead to unemployment in the local market.
Colonialism. Sometimes independent countries become colonies of other
nations. Good example is large corporations and mega-projects. Time comes
when their whole economy is controlled by corporate tycoons. They become
so powerful that destabilize the countries economically and politically.
Economic and Military War. Every country wants to lead in export and
economic sound position, which leads to become economic rivals. They want
to destabilize other rivals by terrorism, wars etc. Exporting military weapons,
atomic weapons (aircrafts, missals, tanks, automatic and semi atomic guns
etc) is another example of international trade.