Foreign Trade is a kind of marketing between two countries where they share capital, goods, and services across international borders. International trade is significant to GDP. foreign trade plays an important role in the economic growth of any company. Foreign trade also plays a vital role in a good relationship between two countries. Foreign trade is all about imports and exports. Because of labor and natural resources every country has its own resources.
Why is it necessary?
For improving the relationship between countries foreign trade plays a vital role. Because of foreign trade, you get every kind of essential from all over the world in your country. It maintains anything like its natural resources all over the world. And from foreign trade, any country can grow its economic GDP.
There are three types of foreign trade-
- Import- Their country only receives capital and goods from another country.
- Export- This country shares its capital, goods, and services with other countries.
- Entrepot- in this many time capitals imported with the purpose of re-export after some processing operation.
All these processes maintain the relationships and economic growth of the country.
- It ensures the quality of goods. Because if they don’t have good quality then their product will never be purchased from the customer. So selling your product in another country keeps your product quality good.
- Foreign trade creates so many opportunities all over the world from which you can gain profit. It has so many choices and varieties for customers.
- It is highly in demand to maintain their lifestyle in a standard way. Because customers have better quality and a variety of choices.
- Foreign trade generates multiple types of employment opportunities for people. It indirectly increases employment in other sectors of the economy such as industrial, insurance, banking, etc.
- It also maintains the balance of payment position. Like if you are importing something from one country to another then you’ll receive the goodies in the same amount as an export from another country.
Foreign trade is like a backbone of every country to have a good relationship between two countries. It’s also known as international trade.
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