The Introduction of Finance of International Trade

International trade has to do with the buying and selling of goods and services among
countries. No one country has everything that its citizens need. When the goods and services
produced locally are not enough to satisfy the needs and wants of the people more goods and
services have to be imported. Countries all around the world specialize in producing a particular
or a set of goods and services. The surplus of these goods and services are traded by exporting
them, the goods and services that are not produced are imported.

The climate will vary from country to country so it is only natural that a good or service that is
easily produced in one country may be next to impossible to produce in another country. You
cannot think a place like Nigeria can produce the same products with Canada so that means
international trade is very important. Not only is the climate different among countries but the
natural resources owned by countries also varies. Some countries have bauxite, some have oil
and some are very advanced in technology but you will never find all existing natural resources
in one country. International trade is one of the main ways foreign currency is earned. It
promotes and encourages cordial relations between countries.

International trade has many advantages which can greatly benefit the countries involved. It
allows a country to create an industry for importing and exporting which means more jobs and
a lower unemployment rate. It provides competition which means lower prices and better
quality. It encourages the invention of new technology so that trade can take place more
efficiently. It leads to international specialization which in some ways relieves the problem of
scarcity.

There are also some drawbacks to international trade but nothing that can overpower the
advantages. There are different rates of exchange for different countries and the different
languages do not help trade. Some countries have strict import regulations and it is common
for there to be delays in payment. The cost is very high when countries long distances apart
trade and changing customs and taste make advertising very difficult. When it comes to
international trade all countries have the same goal to import as little as possible and to export
as much as possible so it is impossible for this goal to be achieve at the same time by all
counties because one country’s export is another import.

International trade involves many people in order to be carried out effectively, from those with
absolutely essential jobs to those that perform minor tasks. First we have an exporter which is
the one selling the goods and then we have the importer, the one buying the goods. There are
also freight forwarders which ensured that the goods reach the ship safely alongside carriers
and warehousemen. There are insurers in the event that the goods are lost are damaged and
there are banks which are involved in all financial aspects of international trade related
activities.