International trade

International trade is the exchange of goods and services across international borders. In most countries, it represents a significant share of GDP. While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance have been on the rise in recent centuries, mainly because of Industrialization, advanced transportation, Globalization, Multinational corporations, and outsourcing. In fact, it is probably the increasing prevalence of international trade that is usually meant by the term "globalization".

International trade is also a branch of economics, which together with International finance, forms the larger brach of International economics.

1 Regulation of international trade
2 Risks in international trade
- 2.1 Commercial risks
- 2.2 Political risks
3 External links
4 See also

Regulation of international trade

Traditionally trade was regulated through bilateral treaties between two nations. For centuries under the belief in Mercantilism most nations had high tariffs and many restrictions on international trade. In the nineteenth century, especially in Britain, a belief in free trade became paramount and this view has dominated thinking among western nations for most of the time since then. In the years since the Second World War multilateral treaties like the GATT and World Trade Organization have attempted to create a globally regulated trade structure.

Communist and socialist nations often believe in autarchy, a complete lack of international trade. Fascist governments also placed great emphasis on self-sufficiency. No nation can meet all of its people's needs, however, and every state engages in some trade.

Free trade is usually most strongly supported by the most economically powerful nation in the world. The Netherlands and the United Kingdom were both strong advocates of free trade when they were on top, today it is the United States which is its greatest proponent.

Traditionally agricultural interests are usually in favour of free trade while manufacturing sectors often support protectionism. This has changed somewhat in recent years, however.

During recessions there is often strong domestic pressure to increase tariffs to protect domestic industries. This occurred around the world during the Great Depression leading to a collapse in world trade that many believe seriously deepened the depression.

Risks in international trade

The risks that exist in international trade can be divided into two major groups:

Commercial risks

Risk of insolvency of the buyer
Risk of protracted default – the failure of the buyer to pay the amount due within six months after the due date
Risk of non-acceptance

Political risks

Risk of cancellation or non-renewal of export or import licences
War risks
Risk of expropriation or confiscation of the importer's company
Risk of the imposition of an import ban after the shipment of the goods
Transfer risk – imposition of exchange controls by the importer's country or foreign currency shortages

External links

Link2exports Export Country Profiles Export Zone – Country Profiles, is part of the Official British Chamber of Commerce Export Zone, it provides a comprehensive overview of every country in the world and includes demographic, political, social and financial overviews along with details of trade missions and essential business contacts.