You must have heard about the worldwide or global trade, also known as international trade?
Currently, worldwide trading is worth trillions of dollars
Well, what is global trading all about?
When the trading of goods and services between two or more parties takes places across international borders, it is known as international or global trading. Every year, global trade worth more than trillions of dollars take place all over the world. The country that receives or buys the goods is called the ‘importer’ while the one that sells or sends the goods is the ‘exporter.’
The basic principle of global trade lies in the fact that one country can produce or create some goods or services at a lower rate than other countries. This is what adds a comparative advantage to that country against the others.
Advantages of global trading
There are many advantages that global trade have brought in.
- With global trade, the costs of goods and services have lowered
What this means is that each country can focus on producing what they are better suited for. In this way they can enhance their efficiency and maximize production, to boost their profits in the longer run.
- Global trade is perfect for boosting global economy
A country can earn higher revenues by exporting its excess goods and services to a country that needs it. On the other hand, the money that is earned by exporting can be used to import services or goods from the other country. One country can thereby help another country by facilitating better scope of investment for trade in future.
Disadvantages of global trade
Experts have pointed out some drawbacks like:
- Higher use of global transport is harmful to the environment
- Leads to outsourcing jobs to other countries, which might result in lack of employment opportunities in that country