Professional Documents
Culture Documents
1. Introduction 03
2. Classifications of International Trade 04
3. Types of International Trade 05
4. Characteristics of International Trade 06
5. Role or Importance of International Trade 07
6. Benefits of International Trade 08
7. Barriers to International Trade 09
8. Reasons for International Trade 10
9. Problems & Challenges of International Trade 11
10. Advantages of International Trade 12
11. Disadvantages of International Trade 13
12. Theory of Absolute Advantage 14-15
13. Conclusion 16
14. Reference 17
Trade between two or more countries is called foreign trade
or international trade. This involves the exchange of goods
and services between the citizens of two countries. When
citizens of one country exchange goods and services with the
citizens of another country, it is called foreign trade.
Territorial specialization
International competition
Separation of sellers from buyers
Long chain of middlemen
International rules and regulations
Mutually acceptable currency
Government control
Several documents
The Role and importance of international trade are as follows:
More Employment
Political barriers
Standards
Boycotts
Anti-dumping Penalties
Monetary Barriers
Here are seven reasons for growing globally:
Increased efficiency
Increased productivity
Economic advantage
Innovation
Growth
The following are the special problems of international trade:
Distance
Different languages
Risk in transit
Intense competition
Difficulties in Payments
Import and Export Restrictions
Transport and Communications
Lack of information about International Traders
The main advantages of international trade are as follows:
Exhaustion of Resources
Effect on Domestic Industries
Effect on Consumption Habits
Times of Emergency
Economic Dependence
Political Dependence
Import of Harmful Goods
Mis-utilisation of Natural Resources
According to Adam Smith. if one country has absolute
advantage over another in one line of product on and the
other country has an absolute advantage over the first
country in another line of production. then both countries
would gain by trading.
Absolute advantage is the ability of a country, individual,
company or region to produce a good or service at a lower
cost per unit than the cost at which any other entity
produces that same good or service.
According to him, there are following advantages of this theory.