‘Advancement of international trade of a country is an index to its economic prosperity.’ Elaborate with examples.

Foreign trade or international trade is the exchange of goods and services between countries. It is an important component of the economy. International trade can be stated as the measure of any country’s economic wealth.

International trade helps in the integration of the markets in different countries. It will give a lot of opportunities and openings for the domestic producers and consumers to reach out beyond the domestic market. Producers can sell their commodities to buyers from around the world. Consumers also have the choice to select commodities produced beyond the domestic markets. The prices tend to be equal in both the markets gradually. Thus, foreign trade widens the markets for both produces and consumers and helps in connecting the markets worldwide.

International trade improves the quality of the commodities produced in the home country. With the increasing foreign competition, producers of the home country would be forced to improve the production techniques and adopt advanced technologies for production.

International trade also brings in significant foreign exchange earnings through exports. Exports are the commodities produced in the home countries that are sold in foreign markets. This will bring in foreign earnings to the country and will improve the economic position of the home country. Improved trade will also result in higher foreign investment in the home country. The establishment of Multi-National Companies (MNCs) will open the door for a variety of opportunities including employment generation, transfer of technology and financial investments.

International trade will also help in the development of the tourism industry in the country. Tourism provides support to local handicrafts, employment opportunities, development of the backward regions and enables other cultural transfers. It also helps in the development of an international understanding of our culture and heritage. Thus, international trade can be rightly considered as an ‘engine of growth’.