Foreign trade or international trade is the exchange of goods and services between countries. It is an important component of the economy. International trade can be stated as the measure of any country’s economic wealth.
International trade helps in the integration of the markets in different countries. It gives a lot of opportunities and openings for the domestic producers and consumers to reach out beyond the domestic market. Producers can sell their commodities to buyers from around the wold. Consumers also have the choice to select commodities produced beyond the domestic markets. The prices tend to be equal in both the markets gradually. Thus, foreign trade widens the markets for both produces and consumers and helps in connecting the markets world-wide.
International trade improves the quality of the commodities produced in the home country. With the increasing foreign competition, producers of the home country would be forced to improve the production techniques and adopt advanced technologies for production. This will help in the production of more sophisticated commodities in the home market.
International trade also brings in significant foreign exchange earnings through exports. Exports are the commodities produced in the home countries that are sold in foreign markets. This will bring in foreign earnings to the country and will improve the economic position of the home country. Improved trade will also result in higher foreign investment in the home country.
Thus, international trade can be rightly considered as an ‘engine of growth’.
