Importance of foreign trade

Commerce

Foreign trade stimulates the economies of the countries. In addition, it promotes employment, increases the supply of goods and production.

The problem that foreign trade solves is where to place surplus production and where to stock up on inputs not produced in the country. Finished goods are also included. Trade opening, with the signing of bilateral and multilateral agreements, provides the opportunity for companies to access a greater supply and demand.

That is, countries in search of greater diversity of goods and services, go to other countries to meet their needs. The sum of these individual actions of the countries, give rise to international trade. See Difference between international trade and foreign trade

Therefore, foreign trade allows countries to reduce limitations on the availability of materials. As well as raw materials, inputs and finished goods.

Other benefits of foreign trade

Other elements that give relevance to foreign trade are the following:

  • Strengthening bilateral relations: The flow of money between countries generally strengthens their diplomatic ties. These economies tend to generate stronger trade agreements. It also generates greater cultural exchange and ties of friendship.
  • Access to raw materials: In such a volatile market, it is important to strengthen ties with major producers. In this way, you can avoid being affected by political actions by having a supply from a business partner.
  • Taking advantage of comparative advantage: The advantage in production costs will make product prices more attractive to consumers. Exploiting this feature is vital for industries. With bilateral agreements between trading partners, the probability of imposing protectionist measures decreases.
  • Greater variety of products: Consumers will be able to access a greater diversity of products with access to other markets. This could mean an improvement in both price and quality for buyers.
  • Growth and development: Likewise, trade invents economic growth. Therefore, there are better opportunities to improve the quality of life of citizens. Employment and production are created.Increasing the possibilities of achieving economic development.

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