Introduction to International Trade

Study Notes

International trade involves the exchange of goods and services between countries or regions.
This exchange includes importing and exporting products, capital, and services across international borders.
It allows nations to access resources, technology, and markets unavailable domestically.

International trade refers to the exchange of goods and services between countries.
It involves importing and exporting products, capital, and services across international borders.
Trade can be influenced by factors including tariffs, trade agreements, exchange rates, and political relations.
International trade helps countries specialize in goods where they have a comparative advantage.
This promotes economic growth and global interdependence.

International trade is crucial for the global economy.
Economic Growth: Access to larger markets stimulates economic growth.
Access to Resources: Nations obtain necessary resources (oil, technology, etc.) not available domestically.
Specialization and Efficiency: Countries specialize in areas where they are most efficient, leading to economies of scale and lower costs.

Increased Competition: Trade leads to lower prices, better products, and innovation.
Cultural Exchange and Diplomacy: Trade fosters understanding and strengthens international relationships.
Job Creation: Expanding markets create jobs in export-related industries (e.g., manufacturing).
Access to Technology and Knowledge: Trade allows adoption of new technologies and practices from other countries.
Increased Consumer Choice: Trade provides a wider variety of goods and services at lower prices.
Risk Diversification: Reliance on various markets mitigates economic and natural disaster risks.
Improved International Relations: Economic interdependence often leads to peaceful relations among countries.

Trade contribution to GDP varies by country, reflecting the openness and integration of the economy.
Trade is typically represented as a ratio of total trade (exports + imports) to GDP.

Products commonly exported span various sectors, including electronics, automobiles, agricultural products, oil, and energy, and pharmaceuticals.

Includes prescription medications, vaccines, medical devices, and over-the-counter drugs.

Includes precious metals (gold, silver) and industrial metals (copper, aluminum).

Includes industrial chemicals (fertilizers, plastics), paints, dyes, solvents, and specialty chemicals.

Early humans engaged in local and regional trade, exchanging goods like stone, obsidian, salt, shells, and early metals.
Trade routes evolved with the emergence of ancient civilizations.

Mesopotamia and Egypt traded grain, wool, and textiles using river trade routes.
The Indus Valley traded with Mesopotamia exchanging cotton, beads, and precious stones.
Early Chinese civilizations traded silk, pottery, and bronze.

European colonization led to trade routes between their colonies and mother countries.
This impacted indigenous economies and societies.
Industrialization improved production and decreased transportation costs.

International trade organizations were created to promote free trade (e.g., GATT, WTO).
Regional trade agreements emerged (e.g., NAFTA, EU).

Imports: Goods and services purchased from other countries.
Exports: Goods and services sold to other countries.
Trade Balance: The difference between a nation's imports and exports. A surplus occurs when exports exceed imports, and a deficit occurs when imports exceed exports.

The process of increased interconnectedness and interdependence of the world's markets.
Globalization impacts trade patterns and economic policies.

Globalization increases the size of the global market, lowers prices, and allows more goods to be available.
International trade is a main driving force behind global integration.