Foreign Trade

Foreign or International trade is the exchange of goods and services across international boundaries or territories. In most countries, it makes a significant contribution of GDP. Due to Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing international trade has been on the rise. Globalization’s primary meaning is international trade.

In the modern world all the countries whether they are developed or underdeveloped are preoccupied with the problem of selling the merchandise in the overseas. The government provide all possible assistance to the exporters for selling the goods abroad and carefully figure out the monthly export transactions. Exporting goods and services are essential as there is no country in the world which produces all the goods which it consumes. Every country is increasing International Trade for gaining the economic advantages which arise due to international specialization of labor, market availability or cheapest production facility.

The international trade involves some risks which can be divided into two category:

1. Political risks
- War risks
- Risk of cancellation or non-renewal of export or import licences
- Risk of expropriation or confiscation of the importer’s company
- Risk of the imposition of an import ban after the shipment of the goods
- Transfer risk :- imposition of exchange controls by the importer’s country or foreign currency shortages
- Surrendering political sovereignty

2. Economic risks
- Risk of non-acceptance
- Risk of insolvency of the buyer,
- Risk of protracted default - the failure of the buyer to pay the due amount within six months after the due date

No country can hope to sell the goods overseas unless it is also prepared to purchase goods in return. The businessmen who are engaged in the export transactions must export standard quality of goods at normal prices so that they could compete easily in the world market. Export is always dynamic restless and changing. The export enables the country to pay for the imports.

Now a days, most of the countries has liberalized the export policies to push up the foreign trade.

source: http://trade-articles.znetlive.com/