International trade is an exchange of goods and services between individuals and firms from different countries. For several millennia, since the dawn of civilizations, the export of goods to foreign countries in exchange for foreign goods was an integral feature of the global economy.
There are several advantages of International Trade. One of them is that international trade enables every country to receive goods, which country does not produce itself as any country is not self-sufficient. There are also limitations of International Trade. For instance, legal and regulatory forces can heavily affect businesses. Government laws, trade regulations, taxes, and other issues are interpreted differently country by country. This can discourage participation in global business (Feenstra, 2003).
This report covers the following four keys points: theories of absolute and comparative advantage, influences that affect exchange rates, reasoning behind free trade agreements (FTAs), and government policy on economic behavior. Continue reading