Wondering Why?

Why is International Trade important?

Why is International Trade important?

International trade takes the world’s economy to the top position. It is important to carry out the trading at international level as some of the resources that are available in some countries are not available in others. So those people who do not have the resources with them can have the resources by importing them from other countries. So, trading becomes important and necessary in this scenario.

Trading internationally involves sending what the native country produces the best to other countries and buying what other countries are producing best. This trading can improve the economy of the native country and helps in development of the country. International trading decreases poverty, generates employment, develops the economy and increases the income of the nation.

The country which is in developing stage can consider the international trade as an advantage as it brings lot of financial gains to it. The funds that are acquired through trading internationally can be utilized in their best for the needs of the people in the country. Most of the developing countries tend to improve industrialization. But, they also were observed to get the raw materials available as resources with them to the international market. Some of these materials include timber, agricultural products and minerals.

The Sub Saharan African nations earn about ninety percent of their income through international trading by exporting the raw materials. The countries listed by FAO include 47 developing countries. Among these, 24 countries belong to Africa and they totally depend on the export of agricultural products. Some of those countries earn money through trading coffee, sugar, cotton and so on. Madagascar earns income by exporting vanilla. But, Indonesia could challenge Madagascar by providing vanilla at cheaper rate in the international market. In this scenario, countries like Madagascar might benefit or rather sweep the market when there is a good harvest seen from their side. A bad harvest from their side might cancel out their earnings through export.

Global trading allows foreign investors to directly invest in our country. When the foreign people invest in the companies of the developing country, this country can emerge as competitive in participating in all global matters.

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