F Understanding International Trade: Benefits, Types and Drivers ~ Information Yusuf

Understanding International Trade: Benefits, Types and Drivers

What is the meaning of international trade and what is the benefit for the economy in a country? For those who learn about Economics, of course, is familiar enough with this topic because it is often discussed.

International Trade is an inter-state interaction in the form of buying and selling goods or services on the basis of mutual agreement. International trade is not just beginning, but it has been around since medieval times.

Economic relations between countries include three forms of relationship, including:

The exchange of results or outputs of a country with another country, or that we are familiar with international trade
Relationship in the form of accounts payable between countries
The exchange or flow of production or means of production
One of the goals of international trade is to increase GDP (Gross Domestic Product) or the total value of production of goods and services within a country for one year. The impacts of international trade can be felt in terms of social, political and economic interests to help drive the advancement of industrialization, transportation, globalization and the presence of multinational corporations.

A. Understanding of International Trade

Trade can be interpreted as a process of exchange that occurs on the basis of mutual agreement of the parties involved in it. Countries in the world have not been able to produce all their own goods and necessities, they must receive help from other countries.

This process then becomes an inter-state trade activity, or an export-import activity. Trade between countries is called international trade.

From the explanation it can be concluded that the notion of international trade is a buying activity conducted by one country with another country, where this occurs as a result of the limited resources of the country. International trade plays an important role in meeting the needs of a country that can not be produced in the country, either because of the limitations of natural resources, human resources, capital, or skill.

Both parties can be between individuals (individuals with individuals), between individuals with the government of a country, or between governments of each country.

Thus international trade allows for:

Sale or purchase or exchange of goods and or services between countries
Cooperation in the inter-country economy around the world
Influence on export and import growth and Balance of Payment (NPI) of a country
Exchange and expansion of technology use so as to accelerate the economic growth of the countries involved in it
The movement of resources through national borders, both human resources, natural resources, and capital resources

B. What are the Benefits of International Trade?

The existence of international trade can provide several benefits and benefits that can be obtained from each country that cooperates in the field of trade.

These benefits include:

Can obtain goods or services that can not be produced by themselves due to differences in natural resources, human resource capabilities, technology and others.
Can expand the market for the purpose of adding advantage of specialization
Allows the transfer of modern technology to understand more efficient and modern production techniques in terms of management.
Can accelerate the economic growth of a country
Increase the country's foreign exchange from export
International trade can open jobs in a country
Make friendship with other countries
Improve the dissemination of a country's natural resources
C. Factors Driving International Trade

International trade occurs because of several factors that require a country to enter into international trade cooperation. Because each country can not fully meet the needs of its own country in the absence of resources from other countries, it can be from its natural resources, human resources, capital as well as in technology.

Here are some factors driving the emergence of international trade:

Free Market

Economic freedom or liberalism has begun to be invested in international trade. Everyone has the right to increase and expand their market to sell cross country products.
Free markets are needed to enhance cooperation among countries that are likely to increase state revenues. Economic freedom becomes the trigger of individuals and groups to compete to increase markets and increase production.
Next Post »