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International Trade - Meaning - Features

International trade involves the exchange of goods and services between countries, allowing access to a wider market and competitive pricing for consumers. It includes export trade, import trade, and entrepot trade, each serving different functions in the global economy. Factors such as immobility of labor, heterogeneous markets, national policies, and different currencies significantly influence international trade dynamics.

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10 views16 pages

International Trade - Meaning - Features

International trade involves the exchange of goods and services between countries, allowing access to a wider market and competitive pricing for consumers. It includes export trade, import trade, and entrepot trade, each serving different functions in the global economy. Factors such as immobility of labor, heterogeneous markets, national policies, and different currencies significantly influence international trade dynamics.

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nanthanadc
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© © All Rights Reserved
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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.
International trade 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. This ultimately results
in more competitive pricing and brings a cheaper product home to the consumer.
EXPORT TRADE
Export trade is when goods manufactured in a specific country are purchased by the
residents of another country.
It can also apply to services that are provided in one country and for the benefit of
someone living in another country. In this transaction, the seller of the goods or service
is known as the exporter.
IMPORT TRADE
This is where goods or services are brought into one country from another, where they
were originally manufactured or created.
Goods are normally imported when the country of origin does not have the demand for
the goods. Or, where the manufacture of goods in one country is significantly lower than
it would be in the receiving country.
Goods can also be imported if they cannot be manufactured in the desired country – an
example being the import of crude oil.
ENTREPOT TRADE
Also known as transhipment, Entrepot Trade is where goods are imported into a country
and then re-exported out, without being distributed within the importing country.
For example, if metal is imported from India to Singapore, processed and then
re-exported to China, it is entrepot trade.
This form of trade is used for a number of reasons, including access to machinery, the
development of technology and to help reinforce international relations.
(1) Immobility of Factors:
The degree of immobility of factors like labour and capital is generally greater between
countries than within a country.
Immigration laws, citizenship, qualifications, etc. often restrict the international mobility
of labour.
(2) Heterogeneous Markets:
In the international economy, world markets lack homogeneity on account of differences
in climate, language, preferences, habit, customs, weights and measures, etc.

The behaviour of international buyers in each case would, therefore, be different.


(3) Different National Groups:

International trade takes place between differently cohered groups. The socio-economic
environment differs greatly among different nations.
(5) Different National Policies and Government Intervention:
Economic and political policies differ from one country to another. Policies pertaining to
trade, commerce, export and import, taxation, etc., also differ widely among countries
though they are more or less uniform within the country.

Tariff policy, import quota system, subsidies and other controls adopted by governments
interfere with the course of normal trade between one country and another.
(6) Different Currencies:
Another notable feature of international trade is that it involves the use of different types
of currencies.
So, each country has its own policy in regard to exchange rates and foreign exchange.
Assignment
History of Foreign Trade in India – 22BFT001, 03 & 05

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