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Introduction to International Trade Learning objectives To learn the definition and features of Intl trade; To understand the basic concepts in Intl trade. Trade Trade is the activity of buying, selling, or exchanging goods or services between people, firms, or countries. Trade products Fall into 3 kinds: Primary products: natural resources Secondary products: manufactured goods Tertiary products: services Intl trade Intl trade/world trade: the fair and deliberate exchange of goods, services, across national boundaries. In the past 30 years, the volume of Intl trade in goods and services has expanded from $200 billion to more than $7.6 trillion. Intl trade Reasons of Intl trade Resource reasons: no country has all of the commodities that it needs. Countries have different climate for growing products. E.g. The U.S. is a major consumer of coffee, yet it does not have the climate to grow it. Raw materials are scattered around the world unevenly. E.g. Copper is mined in Peru and Zaire; diamonds are mined in South Africa; oil is mined in the Middle East. Reasons of Intl trade Economic reasons A country often does not have enough of a particular item to meet its needs. One country could sell some items at a lower cost than other countries. China could produce textile, garments and shoes more efficiently than other countries. China’s textile companies made 18 percent of the clothes sold in the world in 2008. Reasons of Intl trade Yiwu is the world’s largest sock factory. Factories in the small coastal factory town produce two million socks a day, nine billion pairs in a year -- one third of the world’s socks, enough to provide at least one pair for every person on the planet. Local people call their town “Sock City.” Reasons of Intl trade Preference reasons Even though the U.S. produces more automobiles than any other country, it still imports large quantities of autos from Germany, Japan, and Sweden for innovation or a variety of style. The specialty of
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