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Introduction
International trade is nothing but the trade that occurs across international borders. It is also known as global trade, and it involves the exchange of goods and services between nations. It allows nations to partner with each other. You can also learn the changing pattern of the composition of India’s exports with Geography Class 12: International Trade.
You can specialise in one product and then exchange it with other nations. Our markets have a variety of products because of international trade. Globalisation is attributable to international trade. Some keywords might be associated with international trade. Continue reading to learn more about Geography Class 12: International Trade.
The direction of International Trade:
International trade takes place whenever two countries want to do business together. The absence of trade between two countries is known as autarky.The other country then trades this product with us. An example of foreign trade by two countries can help us understand the direction of international trade. The countries with a comparative advantage produce a particular good or services.Specialisation in a particular good or service and trade with another country plays a major role in international trade. In this manner, countries do not need to produce all goods, but instead, specialise in some then trade others.
International Trade: History
Trading was restricted in mediaeval times to regional markets. The Silk Route, for example, saw trade reach long distances relatively slowly. Rome and China were connected by 6000 km of trade routes. They transported Roman wool and Chinese silk by these routes. Ocean and sea routes were later found, and trade improved.Portuguese, Dutch, Spanish, and British forces enslaved African natives in the 15th century and sold them to slave traders in America. During the Industrial Revolution, industrialised nations began exporting their finished goods to less-developed nations.Trade between countries is possible due to manufacturing and the specialisation of work. Partners in trading enjoy a mutually beneficial competitive advantage.
Direction of trade
The following factors influence international trade:
National Resource Disparities: Resource distribution is uneven across the globe. There are primarily geological, mineral, and climate differences.
Geological Structure: Around the world, there are various types of land that can be used for tourism, agriculture, and other purposes.
Mineral Resources: Mineral-rich regions will foster industrialisation, which will lead to a trade.
Climate: Consequently, the plants and animals of a particular region can differ. For instance, wool is produced differently in colder regions. A tropical region produces bananas, cocoa, rubber, and rubber.
Population Factors: According to the type and volume of goods, population size, diversity, and distribution affect trade between countries. Due to local consumption, densely populated areas have a higher rate of internal trading than foreign trade.
Cultural Factors: Some cultures developed art forms, crafts and trade goods. Porcelain and brocade are produced in China. Carpets are produced in Iran, and batiks are produced in Indonesia.
Development Stage: Exports from industrialised nations involve finished goods, machinery, and imports are primarily food grains and natural resources. Where agriculture is paramount, the picture is reversed.
Investments from foreign countries: Emerging markets lack capital. Therefore, foreign investments can enhance trade by encouraging plantation agriculture.
Trade was restricted to regional areas due to a lack of transportation in the past. Ocean, rail, and air transportation have expanded, better preservation and refrigeration have increased trade, and the dimensions of trade have increased.
Elements of Global Commerce
The following three elements of global commerce are of great importance:
Trade volume: Essentially, it is the total exchange of products and services value. As a result, the volume of goods traded is usually measured by their tonnage, but the volume of services cannot be calculated by tonnage.
Trade Composition: Primary goods used to comprise a greater share of the total trade in the past, then manufactured goods took over and now minute dominates.
Trade Directions: Exports of valuable products and artefacts from developing countries to Europe were commonplace earlier. European countries exchanged manufactured goods with their colonies’ raw materials and foodstuffs in the late 19th century.
Types of International Trade
International trade can be divided into two main types:
Bilateral Trade: When two countries sign a contract to exchange goods between themselves.
Multilateral trade: On the other hand, it involves many trading countries and goods that they specialise in. Several trading partners may also be granted the most-favoured-nation status (MNF).
Balance of Trade
An import and export balance depicts the value of products imported into and exported from a country. The value of exports is greater than the cost of imported goods in a favourable trade balance.Imports are greater than exports in an unfavourable balance of trade. As a negative balance of payments indicates a country’s expenses are greater than its revenue, its economy is impacted.
Reasons for rise in overseas trade
As a consequence, we can sum up international trade as merits and demerits.
- Merits of International Trade: Trade is beneficial if it enhances specialisation, raises production levels, improves living standards, makes goods and sends readily available around the world, equalises prices and wages, and spreads knowledge and culture internationally.
- Demerits of International Trade: Compared to other countries, it leads to economic dependence, uneven levels of development, and exploitation as well as competitiveness.
- Gateways of International Trade: International trade is largely conducted through ports and harbours. It is also possible to dock, load, unload and store goods at these ports to pass-through charges and travellers.
Conclusion
India has a history of conducting business with foreign countries. As early as the Indus valley civilization, Indian merchants traded with foreign nations.Through the sea routes, Europeans have traded with Indian rulers since 1498. There were primarily spices like ginger, pepper, cardamom, cinnamon, mace, nutmeg, and cloves exported.Throughout 1947-1991, the markets in India were largely closed. Importation of goods was heavily taxed. Foreign direct investment was severely limited.Foreign trade significantly improved after 1991’s liberalisation. The Indian market ships around 7,500 products to approximately 190 nations and imports about 6000 goods from 140 nations. Commodities (merchandise) are not the only items exported and imported. There are also many service exports and imports.
