International Trade

International trade

open vs closed economy

Reasons for International Trade:
Scarcity of Resources

Reasons for International Trade:
Specialisation

Reasons for International Trade:
Earn Foreign Exchange

Reasons for International Trade:
larger Market Size

Reasons ofr International Trade:
Greater variety of good

Reasons against IT:
Unfair competition to infant industries

Reasons against IT:
Dumping

Reasons against IT:
Current Account Deficits

Reasons against IT:
4. Growing dependency on essential imports

Reasons against IT:
Depletion of non-renewable resources

Protectionism (Barriers to trade)

Barriers to Trade:
Tariffs & Customs duties

Barriers to Trade:
Quota

Barriers to Trade:
Embargo

Other Protectionism tools:
Subsidies

Other Protectionism tools:
Restricting import liscense

Other Protectionism tools:
Devaluation

Other Protectionism tools:
Exchange Control

Balance of Payments

Deficit (unfavourable) balance

Surplus (favourable) balance

The Current Account

visible trade

invisible trade

transfers

income

Balance of Trade

The Capital Account

Official Capital Flows

Private Capital Flows

Official Reserve/Financing Account

Impact of Balance of Trade deficit:
1. Depletion of foreign exchange reserves

Impact of Balance of Trade deficit:
Increased government borrowing

Impact of Balance of Trade deficit:
Unemployment

Impact of Balance of Trade deficit:
4. Improvement in the standard of living

Impact of Balance of Trade deficit:
Currency Depreciation

Balance of Trade Surplus Impact:

Balance of Trade Surplus Impact:

Balance of Trade Surplus Impact:

Balance of Trade Surplus Impact: