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International Trade

Essay by   •  September 12, 2011  •  Essay  •  317 Words (2 Pages)  •  1,631 Views

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International trade is a term that describes exchange of capital, goods and services across international borders or territories.

Fundamentally, trade, no doubt, implies exchange of goods between persons, but there are marked differences between domestic trade and international trade. The features of international trade are as follows:

International trade crosses national frontiers. Plus, the distance involved in export of goods in external trade is generally greater than in domestic trade.

International trade involves custom duties, exchange restrictions, fixed quotas or other tariff barriers. Moreover the documentation process is more complex as compared to domestic trade and the currency involved also differs.

International trade requires different strategies and marketing policy. Specifically marketing of international products necessitates the need to keep the language and cultural differences in mind.

Several different theories have been proposed to predict patterns of trade and to analyze the effects of trade policies such as tariffs.

Advantages:

Trading globally gives consumers and countries the opportunity to be exposed to goods and services not available in their own countries. Almost every kind of product can be found on the international market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies and water. Services are also traded: tourism, banking, consulting and transportation. Global trade allows wealthy countries to use their resources - whether labor, technology or capital - more efficiently. International trade not only results in increased efficiency but also allows countries to participate in a global economy, encouraging the opportunity of foreign direct investment. A robust and equitable trading system is vital to reduce global poverty, because it drives economic growth and provides jobs in developing countries where they are sorely needed.

Enhances domestic competitiveness & maintains cost competitiveness.

Increases sales and profits.

Reduce dependence on existing markets .

Utilize international trade technology.

Stabilize seasonal market fluctuations.

Enhance potential for expansion of business.

Access to a larger market enables firms to take a greater advantage of economies of scale.

Opens up the opportunity for specialization and gain a global market share.

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