What is a trade? Explain the importance of international trade.

1. Trade, in basic terms, refers to the exchange of goods among people, states and countries wherein the market is the place where such exchanges take place.

2. International trade refers to the trade that takes place between two countries which may take place through sea, air or land routes.

3. Advancement of international trade of a country is an index of economic prosperity and is therefore considered to be the economic barometer for a country. If the balance of international trade is favourable (value of exports exceeds the value of imports), it would result in more foreign exchange earnings for that country.

4. Various countries across the globe have trade relations with the major trading blocks present in different geographical locations. For example – commodities of export include agricultural products, gems, and jewelry, ores and minerals etc. and commodities of import include petroleum and its products, inorganic chemicals, pearls and precious stones etc.

5. In recent years, international trade has under gone immense changes wherein the exchange of commodities and goods has been superseded by the exchange of information and knowledge. For example – India has emerged as a software giant at the international level, earning a large amount of foreign exchange.

NOTE – International trade is an important factor that measures and determines the growth and development of a country’s economy. The advancement in technology nowadays has provided a great opportunity to many countries like India who are playing an important role at the international level.