International Trade

International Trade

International trade is the exchange of goods and services between state-owned enterprises. World trade is a set of foreign trade of all countries in the world.

Components of International Trade

World trade consists of exports and imports. Export of goods means that their implementation takes place in a foreign market. The economic efficiency of exports is determined by the fact that this country exports those products which production costs are lower than the world ones. The size of the winnings depends on the ratio of national and international prices of the product.

When importing goods, the country purchases products which production is currently economically unprofitable. The economic efficiency of imports is understood as the economic gain that a country derives from the rapid satisfaction of its needs for certain goods through the import and release of resources spent on the production of such goods within the country. The total amount of exports and imports is the foreign trade turnover of this country with foreign countries.

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The History of International Trade

In the pre-industrial era and the early stages of industrialization of the world's leading countries, agricultural products, mining, and textiles (2/3 of world commodity turnover) prevailed in international trade. Raw materials and foodstuffs were exported from agrarian countries, finished products of mainly consumer use - from industrial countries. In such conditions, the competitive positions of a country and its opportunities in the international division of labor were determined by its natural resources (land, minerals, and climatic conditions).

Later, with the transition of advanced countries to machine production, the leading role in world trade began to be played by finished products. The competition puts producers in front of the need to update the production technology constantly, reduce its costs, and improve the consumer properties of products.

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The Value of the Equipment in International Trade

As a result of the growth of intra-industry specialization, primarily in machine building, the role of machinery and equipment in world trade has increased significantly, and the exchange of machine-building products between industrialized countries has expanded. Significant importance is the delivery of complete equipment for the construction of enterprises, especially in new industries. In general, trade in machinery and equipment accounts for one-third of all modern world trade.

The Role of Raw Materials in International Trade

The growth of industrial production leads to an increase in the consumption of raw materials and, accordingly, to the growth of international trade. The influence of such factors acting under the conditions of scientific and technological revolution affects the more economical use of industrial raw materials and the replacement of synthetic raw materials in many branches of natural raw materials.

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The share of food in world trade has also declined. This situation is explained by the fact that the production of agricultural products has expanded in many developed countries, and, accordingly, the degree of their self-sufficiency in food. The limited financial capacity of developing countries does not allow them to increase purchases of food products on the world market.