Basic introduction about business, trade and international trade. • International Trade, basic concepts of international economics, international business, profit entities, non-profit organizations., limited liability companies, small operations, Trade, buying and selling of goods, buying and selling of goods services, exchange of goods or services, exchange between two countries, import, export, EXIM, Foreign exchange, overseas trade, sold overseas, Visible trade, Invisible trade, boost nations’ wealth, cheaper product or service, living standards, foreign suppliers, better quality, availability, foreign currency, Adam Smith (1723-1790), Scottish moral philosopher, political economy, no sufficient resources, surplus, heart of today’s global economy, Price, quality, quantity, customer satisfaction, Availability, demand, Comparative Advantage, Economies of Scale, Jobs, transfer of technology, Over-Specialization, New Companies, National Security

1. International Trade and Development
UAF20203T
UNIT – I
Objective: To understand the basic concepts of international
economics

2. Meaning of Business
• A business is defined as an organization or enterprising
entity engaged in commercial, industrial, or
professional activities.
• Businesses can be for- profit entities or non-profit
organizations.
• Business types range from limited liability companies,
sole proprietorships, corporations, and partnerships.
• There are businesses that run as small operations in a
single industry while others are large operations that
spread across many industries around the world.

3. What Is Trade?
• Trade is a basic economic concept involving
the buying and selling of goods and services,
with compensation paid by a buyer to a seller,
or the exchange of goods or services between
parties. Trade can take place within an
economy between producers and consumers.

4. What is international trade?
• International Trade refers to the exchange of
products and services from one country to
another. In other words, imports and exports.
International trade consists of goods and
services moving in two directions:
1. Imports – flowing into a country from
abroad.
2. Exports – flowing out of a country and sold
overseas.

5. • Visible trade refers to the buying and selling of
goods – solid, tangible things – between countries.
• Invisible trade, on the other hand, refers to services.
• Most economists globally agree that international
trade helps boost nations’ wealth.
• When a person or company purchases a cheaper
product or service from another country, living
standards in both nations rise.
• There are several reasons why we buy things from
foreign suppliers. Perhaps, the imported options are
cheaper. Their quality may also be better, as well
as their availability.

6. • The exporter also benefits from sales that would not be possible if it
solely sold to its own market. The exporter may also earn foreign
currency. It can subsequently use that foreign currency to import
things.
• The term ‘commerce’ is often (not always) used when referring to the
buying and selling of goods and services internationally.

7. Think??
• Imagine one world in which every single country
traded internationally. Now imagine another world
where international trade did not exist. In which
world would consumers be better off? Also, in which
world would the countries be richer.
In the world with international trade, both the
consumers and the countries would be better off.

8. Think??
• Products imported from Other Countries to India.
• Oil.
• Precious stones.
• Electronics.
• Heavy machinery.
• Organic chemicals.
• Plastics.
• Animal and vegetable oil.
• Iron and Steel.
• Products exported from India to Other Countries
• Precious Stones, Gems and Jewelry. Since ancient times, the land of India has been
known for its precious stones and jewelry. ...
• Petroleum Products. ...
• Cereals. ...
• Pharmaceutical Products. ...
• Homeopathy Medicines. ...
• Meat Products. ...
• Traditional Handicrafts. ...
• Dairy Products.

9. Adam Smith (1723-1790), a Scottish moral philosopher and
pioneer of political economy, believed in international trade.
Many economists today call Smith the ‘father of modern
economics.’

10. Why does international trade exist?
• Nations trade internationally when there are not
sufficient resources or capacity to satisfy domestic
needs and wants domestically.
• By developing and exploiting (utilizing) their
domestic resources, countries can produce a surplus.
They may use this surplus to buy goods they need
from abroad, i.e., through international trade.

11. • Our modern industrialized world would not exist if countries did not
import and export. Simply - international trade is at the heart of
today’s global economy.
• We import goods and services for several reasons. Below are some
reasons:
Price: a foreign company can produce something more cheaply.
Quality: may be superior.
Availability: it might not be possible to produce the item locally.
Therefore, the only way consumers can buy it is by importing it.
A raw material, such as oil, iron, bauxite (ore of aluminium), gold,
etc. might not exist at home country. Japan, for example, has no
domestic reserves of oil. However, it is the fourth largest consumer
of oil in the world. Japan imports virtually all its oil.
Demand: might be greater than local supply. To satisfy the difference,
it is necessary to import.

12. Advantages of international trade:
• Comparative Advantage
• Economies of Scale
• Competition
• Transfer of Technology
• Jobs
Disadvantages of International Trade
• Over-Specialization - lose their jobs in large numbers if
global demand for a product declines.
• New Companies - harder to grow, to compete against
giant foreign firms.
• National Security - risk of being held to ransom (payoff)
by the exporter(s). Strategic industries include food,
energy and military equipment.