Significance of international trade

Introduction The term trade refers to the exchange of goods and services.if this trade is taking place in the boundaries or frontiers of a country is known as internal trade or domestic trade.if the trade is happening across the boundaries of a country means it is known as external or foreign or international trade.international trade is the international exchange of goods and servicesit is a significant part of international economics..international economics is the branch of economis which is concerned with the international trade of goods and services..it is related to economic relationships at international level

Significance of the international trade: According to J.R hicks, if there is any branch of economic theory which is especially relavant to development economics,it is the study of international trade According to Alfred marshall, the causes which determine the economic development of a nation belongs to the study of international trade

The significance for the study of International trade arises from the tremendous advantage of international trade..

1)international division of labour and specialization 2)optimum use of worlds resources 3)stabilization of prices 4)technological progress 5)easy flow of capital 6)promotion of competition 7)greater bilateral cooperation 8)growth of international economic institutions 9)export led growth 10)basis of economic survival

1)international division of labour and specilization It ensures the mobility of the labour and specialization from one place to another.international division of labour and specialization leads to an increase in the real income and the standard of living of people.

2)optimum use of worlds resources Promoting product and factor specialization amoung the countries.the international trade helps the optimum allocation and utilization of all the productive resources of the world

3)stabilization of prices Through international trade the surplus domestic products could be offset through export and the shortage could be removed through import.all this helps the stabilization of price in the concerned country

4)technological progress The main important factor of the international trade is, it leads to the development of technological progress of the country.this is made possible onl b the import of machines,equipments,new designs and technical services from other countries

5)easy flow of capital Good flow of capital b/w developed and underdeveloped countries.both developed and underdeveloped countries have

to depend upon foreign capital for financing international payment deficit and economic development.the international trade facilitates the short term and long term flows of capital

6)promotion of competition International trade promotes the competition amoung the countries.the international competition increases the product efficiency,quality service etc..further, free competition provides the protection from the monopolistic exploitation at the hands of domestic producers