International Trade: An Overview
International trade involves the exchange of goods and services between different countries. The total trade of a country is calculated by adding its exports and imports together. In 2019, global international trade was valued at nearly $19 trillion. Machinery and electronics, such as computers and scientific instruments, accounted for more than 25% of traded goods, followed by automobiles at almost 12% and oil and other fuels at 11%. Pharmaceuticals and chemicals made up an additional 10%.
Key Aspects of International Trade
International trade provides countries with access to new markets and products that may not be available in their domestic economies. It also encourages the development of companies that can compete globally. While trade agreements can lead to increased exports and economic growth, they may also pose challenges to smaller, domestic industries.
Benefits of International Trade
Exports are key in creating jobs and boosting economic growth, while also helping companies gain competitiveness in the global market. Research has shown that exporters tend to be more productive than those focused solely on domestic trade. Additionally, imports introduce foreign competition, which can lower prices and offer consumers a wider selection of products, such as tropical fruits.
Challenges of International Trade
Increasing exports requires making trade more accessible overall, often through reducing tariffs and other trade barriers. While this can benefit consumers, it may negatively impact domestic industries unable to compete internationally, leading to job losses and outsourcing. Traditional economies could also face challenges, such as local farmers losing out to subsidized agribusiness from developed economies.
