Foreign trade is the exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP). Industrialization, transportation, globalization, multinational corporations, and outsourcing are all having an impact. Increasing international trade is crucial for nations to avoid being limited to domestic goods and services.
Exports and Imports
Foreign trade consists of exports and imports:
- Export trade involves selling commodities abroad.
- Import trade involves purchasing from other countries.
The main objective is satisfying consumer demand by taking advantage of comparative advantages.
Complexity of International Trade
Carrying out international trade is complex compared to domestic trade due to factors like currency, policies, economy, laws, and markets. Its importance has risen recently, shaping economies, affecting relations, and driving growth through specialization and market expansion.
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