What is international trade?What do you mean by Balance of trade‘?What is the importance of trade?
Trade between two countries is called international trade. It includes exchange of commodities, services,
information and knowledge.
Relation or difference between nation‘s exports and imports is called balance of trade. It is of two types:
(i) Surplus trade: when the value of exported goods and services is more than the value of imported goods and
services. It is called favorable trade balance.
(ii) Trade Deficit: when the value of exported goods and services is less than the value of imported goods and
services. It is called unfavorable trade balance.
The importance of trade is:
1. No country can survive without international trade because resources are space bound.
2. Advancement of international trade of a country leads to its economic prosperity because such a trade provides
so many jobs to workers as well as business to traders.
3. It is through international trade that we earn much of our foreign exchange which is required for importing
many essential goods.
4. Foreign trade helps in transfer of technology.
