International Trade measures the difference
between imports and exports of both tangible goods and services. The level of
the international trade balance, as well as changes in exports and imports,
indicate trends in foreign trade. Changes in the level of imports and exports,
along with the difference between the two (the trade balance) are a valuable
gauge of economic trends here and abroad. Imports indicate demand for foreign
goods and services in the nation and exports show the demand for national goods
in overseas countries. Countries have different endowments of factors of
production. They differ in population density, labour skills, climate, raw
materials, capital equipment, etc. These differences tend to persist because
factors are relatively immobile between countries. Therefore, the global
economic cannot develop fast without
international trade.
There
two advantages of International Trade.
(1) Absolute
advantage: A country has an absolute advantage over another in the production of
a good if it can produce it with less resource than the other country.
(2)
Comparative
advantage: A country has a comparative advantage over another in the production
of a good if it can produce it at a lower opportunity cost: i.e. if it has to
forgo less of other goods in order to produce it.
International Trade Information web Pages:
*centre for International Trade
*Web Resources for International Trade
*objective of International Trade Research Work in the World
