International Trade

• International Trade is essentially the exchange of goods and services across international borders or territories.

• One of the key concepts in international trade is the principle of Absolute Advantage, which suggests that countries should specialise in producing goods that they can produce more efficiently (with lower costs).

• Comparative Advantage takes this further, suggesting that even if a country can produce all goods more efficiently, there’s still a benefit in trading and specialising where they have a relative (comparative) lower opportunity cost.

• Tariffs and quotas are common protectionist measures. Tariffs are taxes on imported goods, while quotas limit the quantity of a particular good that can be imported.

• Free Trade Agreements (FTAs) aim to reduce or eliminate barriers to trade (like tariffs or quotas), making it easier and cheaper for businesses to trade between those countries. Examples include the European Union (EU) and the North American Free Trade Agreement (NAFTA).

• Emerging economies, like BRICS nations (Brazil, Russia, India, China, South Africa), present both opportunities and threats for businesses involved in international trade.

• Currency exchange rates significantly impact on international trade. A weak domestic currency makes exports cheaper and imports more expensive, whereas a strong domestic currency has the opposite effect.

• Multinational Corporations (MNCs) are key actors in international trade, with operations in multiple countries. They often influence trade patterns and can face both benefits and drawbacks from their global presence.

• Developing nations often face challenges in international trade, such as infrastructure weaknesses, low skills levels, and limited access to technology.

• Ethics and sustainability have become increasingly significant in international trade. Fair trade, environmental impact, and labour conditions are all important considerations for contemporary businesses.

• Trade Blocs, such as the EU, are groupings of countries within specific geographical areas to promote trade and economic growth.

• Global Supply Chains are networks created among different worldwide businesses to produce, handle, and distribute specific goods or services.

• There are disputes and conflicts in global trade, often handled by the World Trade Organisation (WTO). These often relate to issues like tariff barriers, trade wars, dumping, etc.