INTERNATIONAL TRADE

International trade /foreign trade refers to the exchange of goods and services across the boarder of two or more countries by their resident and government. In other words, it is exchange of goods and services between people and different countries.

FORMS OF FOREIGN TRADE

Bilateral Trade: This takes place when one country agrees to (trade) exchanged goods and services with another country e.g. Nigeria and Japan
Multilateral Trade: This is the buying and selling of goods and services among countries. It occurs when each nation buys and sells with whatever country it wishes to track with e.g. Nigeria has multilateral agreement with countries as America, Russia, China, Britain etc.

INVISIBLE IMPORTS

These are services provided by other countries e.g. banking, insurance, shipping, transportation etc.

EXPORT TRADE

Is the selling of a country’s products in abroad i.e. selling of one country product to other countries.

Export includes goods and services to other countries. Export can be visible or invisible.

Visible Export: are tangible goods sold to other nations. Nigeria exports are agricultural product and mineral resources. These are sold to overseas without being processed e.g. crude oil, cotton, palm oil, etc.
Invisible Export: are services sold to other countries – invisible export cannot be seen or inspected e.g. banking, insurance, transports.

BARRIERS TO INTERNATION TRADE

Currency differences: Differences in currency is a barrier because it involves two or more currencies change in exchange rate and non availability of foreign currencies hinder the flow of goods.
Artificial barrier: Imposition of duties like tariff on imported goods create barrier strict regulation and tariff limits the extent of foreign trade.
Distance: Distance between one country and another and the cost of freight all hinder foreign trade.
Cultural problems: Customs and traditions various countries keep away businessman and have negative impact on foreign trade.
Difference in language: language differences creates communication barrier.

DIFFERENCE BETWEEN DOMESTIC AND FOREIGN TRADE

DOMESTIC TRADE	FOREIGN TRADE
1. It is a trade within the boundary of a country	Trade with other countries
2. Same currency is used to transact business	Different currencies used for business
3. Same weight and measures are used	Different weight and measures are used

SIMILARITIES

Both are facilitated by aids to trade
Both involve buying and selling
Currencies are used in both trade
Both are division of trade

IMPORT TRADE: is the buying and selling of goods and services from other nations. It can be grouped into visible and invisible imports.

VISIBLE IMPORTS: They are physical or tangible goods purchased from other countries. It include capital and consumer goods e.g. Automobiles, equipment machinery, electronics, clothes etc.

REASONS FOR INTERNATIONAL TRADE

Inequitable distribution of natural resources. Natural resources are not evenly distributed and one country is blessed in a particular resources than the other.
Differences in skill and technical know her countries are more developed than others and this add to differences in products produced and the need for exchanges.
The quantity and quality of labour force.
Cost of production: a country imports goods she can even produced locally if their cost cheaper abroad
The need to expand local market.

ADVANTAGES OF INTERNATIONAL TRADE

It leads to interdependence among nations because no nation is self – sufficient
It is a source of revenue
Equitable re-distribution of natural resources

DISADVANTAGES OF INTERNATIONAL TRADE

International trade leads to exploitation of poorer countries
It leads to dumping of goods
Visible imports