International trade is crucial for a country’s economy, as it affects the trade balance, GDP, and employment. It also opens up untapped markets for businesses, maximizing profit and promoting a country’s values and lifestyle. The role of international trade is to find a balance between import and export to keep the economy strong and citizens happy.
International trade plays an important role in the economy of each country. The trade balance, or the amount of imports versus exports, drives a country’s assessment of its gross domestic product (GDP) and ultimately affects the public’s perception of the health of the economy. More importantly, international trade opens up untapped markets for sellers and increases home country productivity as workers are employed to manufacture the goods to sell globally.
It is a common axiom in business that 95 percent of a company’s potential market is abroad. A business that is limited to sales generated within national borders is missing out on the potential to grow the business exponentially. From a business perspective, the role of international trade is to maximize profit for owners, the most important mandate for corporations and many other types of businesses.
Governments consider the role of international trade from a broader perspective on the health of the economy. The ability of the business sector to manufacture goods for export means that more of the country’s labor is employed, producing a greater amount of inventory. It also means that the country is in a stronger position globally, as it practically exports the country’s values and lifestyle along with its products. Every domestic product that takes off in a foreign country makes it that much harder for the foreign country’s government to risk damaging trade relations in international negotiations on unrelated issues.
Gross domestic product, an economic indicator that monitors a country’s level of production, is affected by international trade. If a country imports more than it exports, its GDP will likely decline over time as the country becomes dependent on imported goods and loses the ability to employ its own citizens in the production of goods that the public wants to buy. The role of international trade in the economy is to find a balance between import and export that keeps the country’s economy strong and its standard of living high.
Perhaps the most important role of international trade is to keep the citizens of a country healthy and happy. International trade provides all the goods and resources that a country cannot effectively produce. From making coffee available in Alaska to providing wood products to desert countries, many would be unhappy if they could only buy what their own country could produce. As people around the world are able to communicate better, it has become more difficult for governments to convince the public that they should happily do so without the modern conveniences enjoyed by people in other countries. The lack of availability of modern goods over time has contributed to citizen uprisings in countries with governments that have tried to isolate the country from the world.
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