The Importance Of Foreign Trade

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Foreign Trade Foreign trade is nothing but trade between the different countries of the world. It is also called as International trade. Foreign trade is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP). Importance for a Country to participate in Foreign Trade All countries need goods and services to satisfy wants of their people. However, no country can produce all the goods and services that it requires as every country has only limited resources. Therefore, countries have to buy from other countries what it cannot produce or can produce less than its requirements. Similarly, it sells to other countries the goods which…show more content…
Division of labour and specialisation - Foreign trade leads to division of labour and specialisation at the world level. Some countries have abundant natural resources. They export raw materials and import finished goods from countries which are advanced in skilled manpower. This gives benefits to all the countries and thereby leading to division of labour and specialisation. 2. Equality of prices- Prices can be stabilised by foreign trade. It helps to keep the demand and supply position stable, which in turn stabilises the prices, making allowances for transport and other marketing expenses. 3. Availability of multiple choices - Foreign trade helps in providing a better choice to the consumers. It helps in making available new varieties to consumers all over the world. 4. Raises standard of living of the people- Imports can facilitate standard of living of the people. This is because people can have a choice of new and better varieties of goods and services. By consuming new and better varieties of goods, people can improve their standard of living. 5. Generate employment opportunities - Foreign trade helps in generating employment opportunities, by increasing the mobility of labour and resources. It generates direct employment in import sector and indirect employment in other sector of the economy. Such as Industry, Service Sector (insurance, banking, transport, communication),…show more content…
Promotes World Peace- Foreign trade brings countries closer. It facilitates transfer of technology and other assistance from developed countries to developing countries. It brings different countries closer due to economic relations arising out of trade agreements. Thus, foreign trade creates a friendly atmosphere for avoiding wars and conflicts. It promotes world peace as such countries try to maintain friendly relations among themselves. Guiding factor and reform measures the Government of India can leverage to further boost the international trade prospects of India’s agriculture sector. Increasing agricultural growth is critical not only for India to sustain highgrowth rates, but also to move millions out of poverty. Currently, 60% of thelabour force is employed in agriculture. Agriculture will have to contend with two other problems. First, the loss of agricultural land for non-agricultural uses as India industrialises and urbanises.Second, soil erosion due to intensive farming and environmental degradation.Since there are limits to enhancing area under cultivation, as forest cover isalready dwindling, raising agricultural productivity will be

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