International Trade Assignment

International trade is a notion that involves an exchange of goods, service and capital across borders of territories that engage the activities of the nations, private companies or individuals. A country involving in international trade may either sell its goods and/or services to another country which is referred to as exporting; or buy goods and/or services from another country which is referred to as importing. Goods that are traded in the international market can include industrial machines, cloth, food, spare parts etc. The services that are involved in trade include transport and distribution, tourism, financial services etc. Export and import data are contained in the balance of trade which is one of the components of the current account.

It has also spurred industrialization, technological progress, outsourcing and global value chains which in one way or another have an impact to international trade. International trade has become one of the important factors in promoting growth and development for most countries. International trade has opened chances for countries to diversify their economy through getting experience and access to new technologies and commodities which enhances efficiency for country’s production and thus improving their GDP. It is important to know that a current trend of trade does not much involve the exchange of finished products and raw materials i.e. cloth and banana, rather involve a movement of finished and intermediate products which add value to commodities. This is highly influenced by the activity of GVC hence fostered international trade globally. Tanzania is a selected country in this research since it maintains its macroeconomic stability and economic growth rate in comparison with other East African countries and African countries in general. Also, improvements in Germany-Tanzania bilateral relations give a researcher a motivation in scrutinizing the nature and source of the involvement of trade between Germany and

This appeared to be very different from other Africa countries that followed the capitalist system. As the outcome of a socialist system, the economy grew at a very low rate due to low production (Moshi and Mtui 2008: 3). In 1970’s Tanzania experienced an economic stagnation, macroeconomic imbalance and a fall in per capital income. The situation persists for 20 years, but some modifications began to appear in 1990’s (ibid: 3). In the 1990’s Tanzania was in progress to fulfil some important national goals such as eradication of poverty henceforth began to implement some economy transformations. This became successful through improvement in macroeconomic policies such as trade liberalization and privatization, which open chances for the increasing rate of domestic market which further expand domestic trade (ibid). From 1995, after the implementation of market reforms and performing macroeconomic adjustment Tanzania experienced an expansion in the economy. The country’s participation of trade domestically reached a high level and this later provides chances for the participation of trade internationally. In considering the trade, Tanzania is a labour factor country. It exports its raw material much to several African countries, Asians, but the volume is less to the East African Region and Eurozone. However, the country imports bulk of commodities from Asia,