International trade is a system of money-commodity relations made up from the foreign trade of all countries. It also can be seen as the process of capital, goods and service exchanging between countries, regions and territories. In many regions, international trade represents a substantial part of the gross domestic product (GDP). Although international trade exists during all human history, its economic, social and political value has significantly increased in recent decades. Industrialization, transportation, globalization, multinational corporations, and outsourcing have a huge impact on the international trade system. The increase of international trading processes is essential because of the rapid development of globalization. Without international trade, countries would not have enough opportunities to consume goods and services that were produced within their own borders.
An absolute advantage of international trade refers to the ability of countries and companies to produce more goods with the same amount of resources than their competitors do. The comparative advantage of international trade refers to the ability of countries and companies to produce the same amount of goods but for lower price than their competitors do.
There are such factors that influence foreign exchange rates: interest rates (banks in different countries have different interest rates; this make investors think about the balance between returns and funds safety; this also can influence the investing streams of different countries); employment rates (the growing amount of unemployed people is a signal that the economy of this country is slowing down, which is bad signs for the investors); trade balance (it influences the amount of supply and demand of currency); political stability and economic performance (these factors determine how stably the business performs in the country, and decrease the possibility of huge changes in low and economic environment).
The main issue that surrounds international trade is the balance between protecting country and allowing more freedom for international trade. This is the main point, because it is about price competition and new job positions. The more freedom international trade receives, the more products would be imported from other countries that would increase competition and would make some companies go out of business. These would lead to the unemployment. There are other issues that surround international trade; some of them are global market development, child labour usage, government sanctions, tariffs, embargoes, and the EU, NAFTA, WTO organisations.
World Trade Organisation is an international organisation that supervises and liberalizes international trade processes. One of the topics that WTO highlights is intellectual property rights. This topic is discussed across the countries, because some of them do not strongly protect intellectual property rights, which decreases the quality of products and services, impairs reputation and decreases profit of people, organisations, companies and even countries. The GATT is the international agreement that was concluded in 1947 with the purpose of economic recovery after the World War II. During 50 years, this agreement played the role of international organization. The main goal of this agreement was to reduce governmental barriers among countries for international trade performance.
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