The concept, importance and direction of international trade

International trade defines the process of exchange between owner and goods, and trade aims at trade to the international economy. International trade,and commerce

Economic trade dates back to a long time. All types of trade have undergone an evolution and development.

Commerce :

              • It is classified as an economic activity important to human life, mainly due to this long-term trade.

               • It is known that this type of trade facilitates the promotion and exchange of goods and services or both.

               • This is a trade between two or more parties. With the development of the times and the development of civilization, trade has undergone a general and gradual development. Its scope was not only between the two countries in the past, but between two or more countries build it.

The importance of international trade is Foreign trade is one of the most important factors for the success and prosperity of private economies in the world. The special importance of foreign trade lies in:

               • The role of trade in supporting all countries to benefit from the advantages enjoyed by other countries, because other countries cannot rely on themselves and on local resources to meet their own needs.

               • These local resources owned by the state can be used well by countries with the aim of exporting them to all countries of the world to benefit from them.

The importance of foreign trade lies in the points I want to make:

         1. Foreign trade is one of the most important direct means of dealing with international relations between countries, because foreign trade plays an important role in linking countries to each other.

        2. Foreign trade helps to provide a variety of services and goods, based on the principle of specialization in providing products and goods at the lowest prices.

        3. Foreign trade helps support the process of marketing capabilities. This is achieved by creating many new markets for various products.

        4. Foreign trade is committed to improving the level of social welfare, because this is achieved through the efforts made to provide a large number of products that lead to diversification of personal choices whether in consumption or investment.

        5. Foreign trade has been included as one of the important indicators for measuring the ability of countries in the process of competition, as well as for marketing products and global and international production capacity.

         6. Foreign trade engages countries in the process of building a strong economic system.

         7. Foreign trade also promotes the so-called sustainable development through the provision of basic information and appropriate technical means.

         8. Trade also supports the so-called process of economic development, because it is carried out through the development of national income, because it contributes greatly to improving the development process in all countries.

international trade trends Foreign trade depends on several directions, namely:

         first direction

• Adam Smith was known as the founder of economics and the founder of the first trend. In all countries, jobs are divided according to the specialty of each country, because each country provides and offers certain products. The division of these products is a positive feature that each country makes according to its environment, which makes it stand out in its production.

• Adam Smith said that foreign trade mainly depends on absolute expenditure, i.e., exports of the country consist of the least expensive goods.

• But merchandise imports arise from goods produced with the highest absolute expenditure.

       second direction

• The economist Ricardo, who established this trend, believes that the principle of absolute spending trends can only be applied when used to explain the structure of foreign trade.

• Instead, it is applied to internal trade, after which, Ricardo formulated a rule called Relative Expenditure, this rule shows that foreign trade depends on the relative costs of different products.

• Because it constitutes the merchandise exports of all the comparatively superior goods, but all imports of the goods which provide the highest relative expenditure.

        third direction

• The founder of this trend is the economic thinker Michael Porter, who formulated his own rules of competitive advantage, which encouraged the development of Ricardo’s rules of comparative advantage.

• This is to be used to express the characteristics of each country depending on the modern factors of production to produce certain products, such as: Therefore, the goods of foreign trade are determined by the specialized nature of the state in the process of production and export of services and products, and depends on the advantages it obtains.

• However, imports of goods which the country cannot produce are classified as factors of competitive advantage.

        Fourth direction

This trend depends on competitiveness, because this trend indicates the ability of a country to supply demand in the international market.

This is achieved by synchronizing and unifying the development of life with the protection of individuals and citizens.

Advantages of international trade
International trade has many advantages,
but the main ones are:

• Foreign trade enhances and supports economic growth by providing job opportunities.

• Foreign trade also supports local companies by providing them with sufficient expertise to provide products to all foreign global markets. Foreign trade helps companies gain a competitive advantage in their respective fields. Foreign trade helps enterprises obtain the competitive advantage in their field.

• Foreign trade helps to pay attention to foreign competition that depends mainly on imports by reducing the prices of products on those who consume them.

• Foreign trade is working to provide many different types of services and goods for individuals.


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