Trade and its type

DEFINITION

There are 2 main types of trade:

1.International trade

2.Domestic/local trade

The exchange of goods and services across the borders is called international trade.

The trade which takes place within the country in called domestic or local trade.

TRADE IN PAKISTAN

Pakistan’s trade comprises of 33% of its GDP, which includes the imports and exports.

The study of economic development cannot be sufficient until we have the proper knowledge of international trade taking place in our country.

It defines a very major aspect of the economy of any country.

ROLE OF INTERNATIONAL TRADE IN ECONOMIC DEVELOPMENT

1.It is a source of increase in living standard of a nation.

2.It leads to economic growth.

3.Through international trade, low income economy can be converted to high income economy.

4.International trade discourages formation of monopoly in the country.

5.National income also increases with the expansion in the scale of production.

NURKSE VIEW OF INTERNATIONAL TRADE

According to the famous economist Nurkse:

“Trade is the engine of economic growth”

IMPORTANT FACTORS OF TRADE OF PAKISTAN

1.The main exports of Pakistan are primary goods, like raw material.

2.Trade takes place through sea ports.

3.The main imports of Pakistan are industrial goods, like machinery.

4.Pakistan has an increased rate of imports as compared to exports.

5.The unfavorable terms of trade also are a hurdle in international trade.

6.Limited trade relations also depict trade of Pakistan.

7.Being an agriculture based country, we still import food products.

FACTORS EFFECTING INTERNATIONAL TRADE

Factors which effect the international trade are as follows:

1.Industrialization

2.Transportation

3.Multinational corporations

4.Productive capacity

RECANDIAN MODEL OF TRADE

Recandian  model explains comparative advantage theory in a very easy way.

If country A can produce a good cheaper than the other country B then, country A should specialize in the production of that good. This is called comparative advantage theory.

It means that only one country specializes in the production of a specific good, and can earn more profit as compared to other countries.

For example Pakistan can produce wheat in cheaper rate as compared to India so, we should specialize more of wheat and export it to other countries.

CONCLUSION

Hence, we can conclude that international trade in a major source of increasing GDP and living standards of people.

We should promote the domestic trade so that we can bring fame to our culture and values.

We should always try to make good trade relations with other countries so that we can bring prosperity for our countrymen.