Significance of Foreign Trade
“In the present complex world, commerce has assumed such huge proportions that we cannot think of a world devoid of commercial processes. At the present juncture nobody is self-sufficient and mutual dependency is the order of the day.”
At the initial stages of human development human beings were not much inclined towards business. They consumed whatever they produced and did not believe in saving for the future. Perhaps, the scanty exploitation of the resources was the major reason for this.Human wants were limited and people fulfilled their wants with limited resources, which they themselves produced. But this self-dependence could not last long. With the explosive increase in needs, the methods of barter and trade got developed gradually.
Commerce is the sum total of all those processes that are engaged in removing the hindrances of person, place and time in exchange of commodities. In the present complex world, commerce has assumed such huge proportions that we cannot think of a world devoid of commercial processes.
It has achieved great importance. Developments in the means of transportation and communication have knit together all the nations of the world into one big market. At the present juncture nobody is self-sufficient and mutual dependency is the order of the day.
All the more countries that are ideologically poles apart or even are each other’s staunch enemies resort to commerce and trade with each other. The best example is that of economic agreements between liberal USA and communist China and the case of trade between democratic India and unfriendly Pakistan.
Every country aims to raise the living standard of its people. This is only possible if production is increased and inflation is brought under control. For this purpose, every country opens up and resorts to foreign trade.
Trade helps citizens of one nation consume the products of other nations. There is a need of foreign trade due to a variety reasons. Natural resources of the world are not evenly distributed amongst the nations of the world. Due to this, some countries are more suitably placed to produce some goods in an economical manner.
There are also differences in economic growth rates of different countries. Some are developed, some are under-developed and others are developing. The underdeveloped countries have to rely upon the developed economies of the world and this also leads to a great increase in the global foreign trade.
Author - DeeKay
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