WHAT'S FOREIGN TRADE?

Foreign trade is nothing but trade between the different countries of the world. It is also called as International trade, External trade or Inter-Regional trade. It consists of imports, exports and entrepot. The inflow of goods in a country is called import trade whereas outflow of goods from a country is called export trade. Many times goods are imported for the purpose of re-export after some processing operations. This is called entrepot trade. Foreign trade basically takes place for mutual satisfaction of wants and utilities of resources.

Types of Foreign Trade

Foreign Trade can divided into followin two groups:

1.    Import Trade: Import trade refers to purchase of goods by one country from another country or inflow of goods and services from foreign country to home country.

The word “import” is derived from the Word “port”, since goods are often shipped via boat to foreign countries. Along with exports, imports from the backbone of international trade; the higher the value of imports entering a country, compared to the value of exports, the more negative that country’s balance of trade becomes.

2.    Export Trade: Export trade refers to the sale of goods by one country to anoter country or outflow goods from home country to foreign country. The sale of such goods adds to the producing nation’s gross output. If used for trade, exports are exchanged for other products or services in other countries.

Exrports are one of the oldest forms of economic transfer and occur on a large sclae between nations that have fewe restrictions on trade, such as tarifs or subsidies.