International_Trade

It is the buying and selling of goods and services across national borders or in another term is an exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of Gross Domestic Product (GDP). The exchange includes import that the countries buy goods or services from other countries outside and export that the countries sell goods or services overseas. Trading of goods is available with clothes, food, stocks, wines, jewellery and many more products. Trading of services is also done like banking, consulting, tourism, or transportation. The international trade play an important role in the development of a country’s economy in general and in the development of an individual organisation in particular. International trade help a country become richer because rather than the country tries to produce every products which encompass products with no comparative and absolute advantages by itself, it could specialise some particular products which have the absolute and comparative advantages. Many countries are gifted with natural resources; therefore, they can manufacture products with cheaper production cost and sell at cheaper prices. International trade allows countries and customers have more chances to expose services and goods that are not available in their own country. International trade is the backbone of our modern, commercial world, as producers in various nations try to profit from an expanded market, rather than be limited to selling within their own borders. International trade has been present throughout much of history. Its economic, social, and political importance has been on the rise in recent centuries. International trade cost a lot of money because a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture. International trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labor or other factors of production such as capital and labour are typically more mobile within a country than across countries. Trade in goods and services can also serve as a substitute for trade in factors of production. Instead of importing a factor of production, a country can import goods that make intensive use of the factor of production and are thus embodying the respective factor. A good example is the import of labor-intensive goods by the United States from China. Instead of importing Chinese labor the United States is importing goods from China that were produced with Chinese labor. Importance of International Trade to the UK economy: United Kingdom was one of the most open economies in the western world and twenty years ago, foreign exchange controls were abolished and its financial markets have been gradually deregulated which results high and rising percentage of total national output in trade with other countries. International trade has been vital for the UK economy to develop throughout the colonial period, and the post war period. International trade is an essential feature of the UK economy, it is vital for the UK so that it can sustain its economic strengths and progress in an increasingly competitive global economy. The issue of globalisation has created clear economic uncertainty and the evident understanding that the UK economy is susceptible to effects that are clearly outside its realm of influence. The UK has probably lost forever its comparative advantage in producing low-value added manufacturing products. Other countries with significantly lower labour costs can now meet global demand for many textile and clothing products and cheaper electronic products at much lower cost than we can. Whereas the global demand for high skill services and high value-added manufacturing output remains strong and a rising share of UK exports overseas are in hi-tech manufacturing industries and knowledge-intensive services. Globalisation has intensified interdependence and competition between economies in the world market. This is reflected in Interdependence in regard to trading in goods and services and in movement of capital. As a result domestic economic developments are not determined entirely by domestic policies and market conditions. Rather, they are influenced by both domestic and international policies and economic conditions. It is thus clear that a globalising economy, while formulating and evaluating its domestic policy cannot afford to ignore the possible actions and reactions of policies and developments in the rest of the world. Employment – its effect have been expressed in economic activity and employment in the advanced economies. Some jobs are lost as firms switch their production to countries with lower unit labour costs. But the neo-classical theory of international trade and most past experiences suggest that all nations in the globalization process will gain in the long run as trade is an important determinant of long run growth and rising living standards. Certain sections of the population in richer countries notably relatively unskilled workers will lose as an abundance of low-skilled labour in developing countries makes itself available to the world's companies at much cheaper costs leading to a fall in the demand for lower skilled workers in industrialised countries. Critics of globalisation in some developed countries point to the risks of increasing income equalities and greater job insecurity together with the threat of structural unemployment in industries where demand for labour falls. Static and dynamic efficiency gain. For consumers and capitalists, the rapid expansion of international trade and foreign investment is a normally considered good thing. Increased competition from overseas leads to improvements in static and dynamic efficiency and gains in economic welfare. Vigorous trade has made for more choice in the High Street, greater spending, rising living standards and a growth in international travel. Expansion of multinational activity. The growth of multinational activity throughout the world is the result of a mix of economic and political factors. Most outward investment from one country to another takes places between developed countries.