THE THINGS YOU SHOULD KNOW ABOUT INTERNATIONAL TRADE

by kapil Mehta # Guest Blogger

We explain what international trade is, its importance, advantages and characteristics. Also, differences with foreign trade, Countries can participate in international trade as sellers or buyers. India in the foreign trade gives an edge to its businessmen who are engaged in the export business by the exemption of custom duty with various schemes such as Advance Authorisation Scheme.

What is international trade?

When we speak of foreign trade, international trade or world trade, we refer to the set of economic transactions that involve the exchange of goods and services between different countries and their respective internal markets.

This exchange allows products to travel and position themselves in other regions, reaching new consumers. Along the way, it also generates an important currency exchange. In the world, most countries participate in one way or another in international trade, either as sellers (exporters) or buyers (importers) to some extent or another, for which they have “open” economies.

This phenomenon of globalization of the economy has allowed foreign trade to grow in volume and importance, as it significantly affects domestic or local trade (internal borders).

India also knows the importance and promotes its industrialists to set up the industry for great competitive products. The machinery or capital goods under EPCG Scheme can be imported duty free by the exporters.

Characteristics of international trade

International trade, as it involves not individuals or entities, but entire countries, always occurs in international currencies (hard currencies, such as the US dollar) and according to a fixed set of rules determined by the countries involved.

Some nations, for example, protect their own industries from foreign products through tariff barriers, that is, import taxes, to make foreign products more expensive and prevent them from competing with local ones. But not all have the same relationship with imports, and some countries promote consumption more dependent on abroad than others.

The balance of payments of a country compares the financial volume imported with the exported one, determining how autonomous a nation is commercially. If you export more than you import, you have an advantageous commercial position vis-à-vis other nations, while if you import more than you export, you face the international market in a weaker position.

Importance of international trade

International trade promotes the productive development of the participating nations. Since its emergence and massification on a planetary scale, international trade has only grown in importance. On the one hand, because the volume of money and goods it mobilizes is enormous, thus promoting the productive development of nations and allowing others to obtain goods and services that they cannot provide for themselves.

But on the other hand, the commercial relationship of the countries dictates an important portion of their diplomatic relations. Consequently, it is common to associate the economic measures and global cycles of capitalism with the outbreak of wars and tensions between the various hegemonic powers of the world.

Difference with foreign trade

International trade and foreign trade how are they different?

This difference is actually about the extent to which we think of both concepts, since they are generally considered synonymous. Thus, when we speak of international trade, we generally refer to all commercial transactions that occur between countries, that is, from a joint perspective.

On the contrary, when talking about foreign trade, we assume ourselves within a nation, and we refer to those activities that said country trades abroad, that is, that it exports to other countries.

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Created on Sep 27th 2020 00:08. Viewed 235 times.

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