Introduction to International Trade

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Introduction to International trade

International trade is the exchange of capital, goods, and services across international borders or territories or in other words is the process of import and export. international trade has been present throughout much of history its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced in technology transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. While In most countries, such trade represents a significant share of gross domestic product (GDP). Increasing international trade is crucial to the continuance of globalization this is because without international trade, nations would be limited to the goods and services produced within their own borders. International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. This type of trade gives rise to a world economy, in which prices, or supply and demand, affect and are affected by global events.

Issue in international trade

I. The difference between international and domestic trade

According to Malcolm (2014) there are several significant differences between domestic and international trade. These differences often have to do is the imposition of tariffs and other charges, how the goods are moved between the buyer and seller, how the buyer goes about paying for the goods and shipping , and even the type of insurance that must be secured as part of the business deal. By knowing these differences can allow buyers and sellers to partic...

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...t international trade still allows for inefficiencies that leave developing nations compromised. What is certain is that the global economy is in a state of continual change, and, as it develops, so too must all of its participants.

Besides that International trade encounters a variety of obstacles which reduce trade incentives. This is usually through tariffs, quotas, taxes, and other trade restrictions. In contrast, protectionism holds that regulation of international trade is important to ensure that markets function properly. Advocates of this theory believe that market inefficiencies may hamper the benefits of international trade and they aim to guide the market accordingly. Protectionism exists in many different forms, but the most common are tariffs, subsidies and quotas. These strategies attempt to correct any inefficiency in the international market.

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