Question

What is international trade and why does it occur?

Answer 1

Answer -
International trade is the exchange of goods and services among different countries.It facilities the country to expand their market for goods and services at global level and not only restricted to domestic level.Basically there are two main activities in international trade .
1.Import trade.
2.Export Trade.
When any country purchasing any goods or services from other country it is called import trade.
When any country sell goods and services to other country it is known as export trade.
From International trading activities countries could achieve foreign currency which will have positive impact on their national income and its strengthen the economy.Because of international trade people in different countries can consume variety of products which aren't produced in domestic country.so it facilites exchange of goods and services and exchange of culture and traditions also with satisfaction of people.It also helps for economic development of the countries as new techniques,skills ,methods of production are used for producing goods for international trade.It increases production, productivity , employment etc in the country.Because of availability of variety of goods at resonable prices people can improve their standard of living also.
Reasons for international trade.
1.All countries can't produce all things which they require.It creates dependency on another country and it results in to International trade.
2.Some countries haven't sufficient resources of production for satisfying their needs and requirements.
3.Sometimes a country having a comparitive trade advantage in production of some commodity but it can't produce another commodities it requires at reasonable cost so it can produce surplus of those commodity having comparitive advantage and export it in exchange of another commodities.
4. There is lack of technology, availability of raw materials,skilled labour etc.in some countries so they depends on international trade.
5.By getting foreign exchange through international trading activities , countries could strengthen their economy and it supports for development.