Knowledge about Foreign Trade

If we know about the core definitions of what is meant by foreign trade then it can help us to conduct international trade more efficiently. Foreign trade can be regarded as the exchange of goods, services, and capital across international territories or borders. In many countries, it shows a specific share of GDP. Advanced transportation, industrialization, Multinational corporations, outsourcing, and globalization all affect international trade in a major way. Raising International trade is important for the facilitation of globalization. It is well known that for any particular nation that is considered a world power, international trade is an important source for their economy. If international trade is not carried out, nations would have to use goods and services produced within the borders of the nation.

Foreign Trade definition

Foreign trade can be described as the goods exchanged across the boundaries of the nation. In principle, foreign trade is not very different from domestic trade as the motivation of the behavior of the parties involved within a trade is not very different from whether the trade is internal or cross border. The core difference between domestic trade and international trade is that domestic trade is not as costly as international trade. The reason behind this is that getting things across borders requires more costs such as costs associated with delays on the border, tariff costs, costs due to different legal systems, different languages, and different cultures. In this context, it should be mentioned that foreign trade or international trade is all about exports and imports. The core aspect of foreign trade between nations is the services and products being traded for some other site within a specific country’s borders. Many nations can produce this product at a certain cost-effective price. Many reasons make foreign trade work such as a sufficient supply of natural resources and labor. In simple words, the capability of nations to produce what other nations want is the basis of what allows the functioning of foreign trades. 

Different types of foreign trade 

Foreign trade is generally of three main types. The different types of foreign trade have been outlined in the following.

Export: Exporting refers to the selling of domestic goods in another nation or country. For instance, the selling of Kareem Garments exports RMG or readymade garments to different western countries. 

Import: Importing refers to purchasing services and goods that have been produced in a foreign country. For instance, importing edible oil from Chinese for selling in Africa

Re-export: The process of importing goods from different foreign countries and re-exporting the imported goods to some other countries is known as re-export. For instance, For instance, a ready-made garment-producing company can import cotton as raw material from Korea, produce garments out of it, and re-export the ready-made garments to Canada. 

International trade

International trade is similar to that of foreign trade. International trade refers to trade between countries. The trade exchange can be exports as well as imports. Export means selling services and goods to foreign countries whereas import means bringing in services and goods to the domestic country. In simple words carrying out the trade at an international level is known as international trade. Through international trade, economic interactions occur between international entities such as economic linkage. Different types of economic linkage are Multinational corporations, Foreign employees, and foreign investment of finances. 

There are several reasons why international trade is carried out. In this form of trade, a competitive advantage is enjoyed by one country for certain services and goods. This further happens if the opportunity cost for the production of a particular good in a country is lower as compared to other countries. If a specific country decides not to trade with other countries then this process is known as Autarky. 

Conclusion

The overall article has been written on the core topic of Knowledge of What is Foreign Trade? The topic of foreign trade must be discussed in the subject of General Knowledge. Further, it should not be ignored in terms of the foreign Bank Exam. All aspects of the core topic have been discussed through discussion of Foreign Trade definition, different types of foreign trade, and the concept of international trade International trade refers to trade between countries and trade at an international level. This has been thoroughly discussed in the international trade section.