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INTERNATIONAL TRADE

International trade or foreign trade is the buying and selling of goods and services outside the countries which means importing and exporting of goods and services.
HOW INTERNATIONAL TRADE ARISES
The following are the reasons of international trade which are:
  • To get what a country does not have/produce because there is no any country that can produce everything to satisfy people’s needs.
  • To sale or dispose the surplus of goods and services produced usually a country produce more than what they need for their domestic uses / consumption therefore surplus must be sold.
  • Geography differences are an important reason for international trade. E.g. If a country is situated in a tropic may fail to produce wheat because the crops grow well in colder countries so they will get wheat from other countries.
  • Resource availability. A country can possess resource which another country does not have e.g. Tanzania is the only one country which produce Tanzanite therefore another countries must purchase Tanzanite from Tanzania.
  • Human skills and productivity. Developed countries produce commodities which cannot be produced by poor countries e.g. tractors, buses, etc. Therefore poor countries must do trade those developed countries to get those commodities and that is international trade. Apart from that poor country can import those people who produce these goods so that they can assist them to produce such goods.
  • Uneven distribution of capital equipment around the world e.g. machines, tools etc
BI-LATERAL AND MULT-LATERAL
1. BI-LATERAL trade: Is the buying and selling of goods and services between two countries.
2. MULTI-LATERAL trade: Is the buying and selling of goods and services which involves many countries.
MULTI-Lateral trade
Is the best trade where by the world is converted in to one market where countries act as both buyers and sellers.
ADVANTAGES OF INTERNATIONAL TRADE
    1. Enable a country to get what she cannot produce herself. Eg.Tanzania imports vehicles, oil, machinery etc.
    2. Enable a country to dispose the surplus goods which otherwise will be destroyed
    3. Afford the citizens of a country to get greater variety of goods example in Tanzania you can buy clothes manufactured in Britain, Romania, Russia, America etc.
    4. Enable countries to specialize in a certain production in which they have the greatest advantages over others E.g. Tanzania can socialize in the production of the Tanzanite is easily bought in the world market.
    5. Promotes competition among producers in the world.
    6. Competition will make producers or manufactures to produce goods which will have high value in the world market.
    7. Promote international understanding because international trade involves movements of people of one country to another country.


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1 Comment

  • Hamza, August 25, 2023 @ 10:04 pm Reply

    Love your work

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