All That You Need To Know About International Trade Types

International trade has been the heart of the global economy. Germinating from the concept of barter exchange, it has a come a long way, right from mercantilism to present globalization.

Operating in its framework, the trade largely deals with the economic exchange of goods, capital and services across a country’s national boundaries. Over the decades, it has helped countries to tackle the challenge of inequitable resource distribution.

While many of us are familiar with the concept of international trade, it’s the international trade types that need some attention. With this thought, let’s get some brief insights on international trade types.

Import Trade

Import trade is a scenario wherein one country purchases goods or services from another country. The name of this trade is largely inspired by the word “port” as the trades in earlier times used to take place primarily through waterways.

Generally, the lack of resources or expertise of a particular country compels it to import goods from other countries which have surplus production of such goods.

For example, India largely imports goods like chemical fertilizers, petroleum products and advanced technology from the USA.

While import trade supports a country, excess of it leads to a deficit in the balance of payments. This is because there is a constant money outflow from the country. Hence, it is pivotal for countries to ensure that their imports do not exceed their exports.

Export Trade

This type of trade represents the act of selling surplus goods and services to other countries. The country selling goods is termed as an exporter while the country who makes a purchase is known as an importer.

Such type of trade proves beneficial for the economy has it brings inflow of foreign currencies. Additionally, export trade also brings in other benefits like increased employment, productive use of surplus goods, better international relations and the list goes on.

Countries like India primarily export goods like rice, textile goods, jewellery, organic oil and medical equipment to the USA.

An excess of exports over imports symbolises surplus or positive balance of payments. Such a scenario stimulates exporter country’s economic development. Perhaps, that’s the primary reason why countries strive to increase their exports over the imports.

Entrepot Trade

Entrepot trade is a situation wherein an import is made by a country with the intention to export the imported goods to the third country. That’s the reason, this trade is also known to some as re-export trade.

Usually, countries in such trade import raw material or semi-finished goods and export a processed version of those goods to other countries. For example, by importing rubber from Thailand, India exports a finished version of it to Japan.

Economies of Hongkong, Dubai and Singapore are largely dependent upon Entrepot trade for their revenues. 

Thus, to conclude, the sphere of international trade is mainly dominated by three trade types: Export, Import and Entrepot trade. Each one has its own set of importance and plays a vital role in the economic development of a country.

Source: General News Blog