International Trade Specialists confirm that the meaning of international trade is the conversation, dealings, sales ( exports ), or purchases ( imports ) of goods, intermediate goods, raw materials, final products, or services between 2 or more countries or between regions and blocks. It was regulated by international institutions or bilateral or multilateral treaties upon reaching a mutual agreement. International trade represents approximately 57% of the economy in the world or the
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Gross Domestic Product World GDP.
More than 50% of the world’s GDP derives from this activity (including international transactions). That is why this article presents a complete view of international trade, all that encompasses and encompasses. What is international trade, its importance, basic concepts, news, and challenges can be found in this article? Learn about international trade courses
International Trade and How It Works
Experts affirm that the definition of international trade is the exchange, transactions, sales (export), or purchases (import) of goods, intermediate goods, raw materials, final products, or services between 2 or more countries or between regions and blocks. They are structured by international institutions or bilateral or multilateral treaties upon reaching a mutual agreement.
Nowadays, the concept of international trade, international treaties, and free trade agreements encompasses many sectors and areas beyond the import and export process and international trade.
For this reason, in this text, we also explain how international trade works with current examples and an in-depth analysis of the context in which open economies with the world develop.
International Trade Models
Over the years, there have been different scholars and authors of economic activity and foreign trade. In their work, they analyzed this activity, trying to understand why it arises, its causes and effects, how it develops, and its impact on the lives of societies and nations.
From there, different international trade theories and models emerge, which in modernity could seem evident (even though they have evolved concerning the present). Still, it is always opportune to study them to understand better the activity of foreign trade, the production, and consumption of citizens.
Advantages And Disadvantages Of International Trade
These would be the main advantages of the practice of it making its actions unfavorable:
- Access to quality products and services that may be at a better price
- Creation of employment sources
- Attraction of Foreign Direct Investment FDI
- Staff skills development
- Productivity increase
- Improve competitiveness as a country
- Increase in National Investment
- Infrastructure Development (roads, ports, airports, railways)
- Reduction of the poverty level index
- Economic and social welfare
- Increased government tax collection
- Development of companies complementary to the core industry.
- economic spill
- access to technology
- International trade operational advice is required with lawyers. And also accountants, advisors, a specific firm, or a professional who has studied international trade. And also foreign trade, and related areas and offers his service. Having experience in management and it service companies with intelligence.
Some Disadvantages Of International Trade Would Be:
- If the demand country drops or an event arises that harms the country where the products are exported. However, the economy of the exporting country is doing well internally. Due to these external factors, it could generate many problems.
- Endanger the continuity of any company either due to internal or external factors
- Costs for certifications and licenses as AEO. Including very high legal requirements to be certified.
- On the issue of health, if a product enters that does not meet the health requirements, it could endanger the health of the population
- The theme of flora and fauna, harm by some plague
- Harming the ecosystem by exploiting natural resources or any particular animal species
- counterfeit products
- Goods damaged during transport
- delivery times
- Wages not necessarily well paid
- Trade tensions, trade wars, protectionism. And also tariff impositions.
According to the World Trade Organization, “from October 2018 to mid-May 2019.And also the value of trade affect by restrictive import measures is estimate at US$339.5 billion.
The second-highest figure on record, after the US$588.3 billion reported in the previous report (mid-October 2017 to mid-October 2018).
It is an example of economic protectionism that affects the global economy. Of course, It highlights that the economies with lower tariffs can be call free trade economies, which would be the opposite of protectionism. The extreme of protectionism would be close economies
Benefits And Importance Of International Trade
Talking about the benefits of international trade activity. And also is closely linked to the importance of foreign exchange and it in transforming people’s lives.
The advantages of it have been mention (without forgetting the digital and online). And also It is possible to understand its importance. From there, the benefits emerge. And also specifying the benefits it generates. Still, if some help had to be mention because it is the most outstanding, it would be the generation of jobs through the attraction of foreign investment.
Because By Increasing Your Potential Market
Production would be lower if you only had the local market without the international need. Still, when you export a particular good or service, production increases, sometimes link to increasing the labor force. Jobs that would not exist if such products were not ship abroad.
And in the case of imports, quality products are access at a reasonable price and that due to the conditions or the environment could not be produce or obtain, without forgetting that importing intermediate goods and raw materials can generate work by using them to create a good end.
Today the Free Trade Agreements generate chapters that open the possibility of sharing information. And also which is not a minor issue for more accelerated development and growth of a particular industry or economy.
International Trade Examples And Success Cases
The World Economic Forum WEF (or WEF for its acronym in English).And also reveal a study in which it stated that in 1993, 60% of the population of Vietnam lived in poverty. And also by 2014 it fell to less than 14%, leaving poverty 40 million people.