Foreign Trade


 
 
Concept Explanation
 

Foreign Trade

Meaning of Foreign Trade

The exchange of goods and services between the two countries is termed as foreign trade The purpose of foreign trade lies in meeting the domestic demands for goods and services. The country exports and imports of merchandise from  to another countries under contract of sale. No county in the world produces all the commodities it  requires. The commodities which a country produces is  an advantage as it can export those commodities.

There are two components of foreign trade

  • Exports When goods and services are sold to the foreign country for the motive of earning more profit, it is called exports.
  • Imports When goods and services are purchased from a foreign country to meet the domestic needs it is known as imports.
  • Features of Foreign Trade

    Import : If the seller is abroad and the buyer is in the bon country.

    Export : When the seller is in the heme country and the purchaser is abroad.

    Visible Trade :  Which can be seen e.g. Trade of goods.

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