MATRIC NO: LAW/2015/161 LEVEL :500

COURSE TITLE: INTERNATIONAL TRADE AND INVESTMENT COURSE CODE: INL501

Question one

Distinguish Between International Trade and International Investment

A trade between two or more countries that connects their various markets is called foreign trade. An investment made by an
organization or a particular individual in some other country is called as foreign investment.

International Trade vs International Investment

The difference between International trade and International investment is that trade involves the movement of goods while
investment involves an objective to earn profits based on only monetary transactions. The prominent difference is that foreign
trade deals with goods while foreign trade deals with capital. By capital, it means monetary underpinnings. Also, another key
difference between International trade and international investment is that international also involves the buying and selling
of the goods along with the movement of goods. The international investment is specifically related to ‘A’ particular business
model, currency exchange and capital investments.

Main Differences Between International Trade and International Investment

Objective: The main objective of foreign trade is to ensure they gain profits by entering the international market through the
import mechanism. The international investment seeps into the objective of gaining long term self-generated capital returns.

Advantage: The advantage of international trade is that it connects various types of markets specific to different countries that
are marked on the globe. On the other end of the spectrum, international investment calls out to engage in additional
investment. This additional investment can be anything that resonates with the constant fast-tracked globalization

Result: As per the understanding through the objectives, advantages, and intention is that both the markets are profit drive; be
it through goods inflow or outflow or capital investment. International trade gives an opportunity to enter the global market
and reach out to the places that would value goods and produces. The result is better income and creating a niche in the
market.

Conclusion: In order to increase the country’s GDP i.e. gross domestic product, both international trade and international
investments act as a catalyst to economic development. But both being aware of the fact that the country’s social, economic,
political scenario may see a change; it is important to be knowledgeable about a few aspects.

Question 2

Distinguish between Domestic trade and International trade

What is international trade? Trade that takes place in two and more countries is known as international trade. No country is
perfect from the economic side. No man can produce his/her essential goods alone. Besides, no country alone can produce
essential goods. Many countries can get better facilities because of the differences in geographical location, weather, rainy,
natural resources, etc
What is domestic trade? Trade that occurs inside a country is called domestic trade. Domestic trade takes place in many
divisions of a country. In short, trade that occurs inside the geographical area of the country traditionally known as domestic
trade. All region in a country does not equally produce all goods.

Differences between Domestic trade and International trade?

Field of trade: Domestic trade occurs inside a country, on the contrary, international trade occurs two or more countries. The
field of International trade is higher than the domestic trade

Differences in the dynamics of the material: The raw material of production can move freely inside the country in case of
domestic trade. But in the case of international trade, the raw material of production can’t move freely between the countries.

Question 3

Distinguish between foreign direct investment and Foreign portfolio investment

Foreign Portfolio vs. Foreign Direct Investment: What's the Difference

Foreign investment, quite simply, is investing in a country other than your home one. It involves capital flowing from one
country to another and foreigners having an ownership interest or a say in the business. Foreign investment is generally seen
as a catalyst for economic growth and can be undertaken by institutions, corporations, and individuals. Investors interested in
foreign investment generally take one of two paths: foreign portfolio investment or foreign direct investment. Foreign
portfolio investment (FPI) refers to the purchase of securities and other financial assets by investors from another country.
Examples of foreign portfolio investments include stocks, bonds, mutual funds, exchange traded funds, American depositary
receipts (ADRs), and global depositary receipts (GDRs).

Question 4

Distinguish between Goods and services

Definition of Goods

Goods refer to the tangible consumable products, articles, commodities that are offered by the companies to the customers in
exchange for money. They are the items that have physical characteristics, i.e. shape, appearance, size, weight, etc. It is
capable of satisfying human wants by providing them utility.

Definition of Services

Services are the intangible economic product that is provided by a person on the other person’s demand. It is an activity
carried out for someone else. They can only be delivered at a particular moment, and hence they are perishable in nature. They
lack physical identity. Services cannot be distinguished from the service provider. The point of sale is the basis for
consumption of services. Services cannot be owned but can only be utilized. You can understand this by an example: If you
buy a ticket for watching a movie at the multiplex, it doesn’t mean that you purchased the multiplex, but you have paid the
price of availing services.

The basic differences between goods and services are mentioned below:

Goods are the material items that the customers are ready to purchase for a price. Services are the amenities, benefits or
facilities provided by the other persons.
Goods are tangible items i.e. they can be seen or touched whereas services are intangible items.