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MBA FA IV SEM 406(A) FOREIGN TRADE-converted

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45 views15 pages

MBA FA IV SEM 406(A) FOREIGN TRADE-converted

I

Uploaded by

karankumar67656
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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TOPIC NAME: FOREIGN TRADE

 Foreign trade is the exchange of goods across national


boundaries.
 Prof. J.L. Hanson said; “An exchange of various
specialized commodities and services rendered among
the corresponding countries is known as foreign trade.”
 Foreign trade is in principle not different from domestic
trade as the motivation and the behavior of parties
involved in a trade does not change fundamentally
depending on whether a trade is across a border or not.
 Foreign trade is all about imports and exports. The
backbone of any foreign trade between nations is those
products and services which are being traded to some
other location outside a particular country’s borders.
 In most countries, it represents a significant share of
gross domestic product (GDP). Industrialization,
advanced transportation, globalization, multinational
corporations, and outsourcing are all having a major
impact on the international trade system.
 Import dependency ( our country foreign trade depend on
import because of high demand and low supply),
 Import capital goods and industrial goods,
 Export of readymade garments (RMG), RMG and Knitwear
74% export,
 Export of agricultural raw materials and products,
 Unfavorable balance of payment ( More import but less
Export),
 Operate most business by sea/ocean,
 More import from Asia (China, Singapore, India ) and
export in Western countries (USA, England),
 Government initiation and control ( By TCB and EPB govt.
control foreign trade and operate helpful initiative ),
 Export of jute and jute goods,
 Export of manpower,
 Private initiative,
 Diversity of import goods ( necessary goods and
unnecessary luxurious goods ).
 Effect of free trade economy ( for open market economy
unnecessary luxurious goods are imported in our country,
and our country’s money went to another country )
 Business with all countries.
 Import
 Export
 Re-export
 Importing is the purchasing of goods or
services made in another country.
 For example, importing edible oil from
Chinese producers to sell in Africa.
 Exporting is selling domestic-made
goods in another country.
 For example, Hameem Garments exports
Readymade Garments (RMG) products to
Western Countries.
 When goods are imported from a foreign
country and are re-exported to buyers in some
other foreign countries, it is called re-export.
 For example, Firm/ Readymade Garments
located at EPZs imports raw materials (cotton)
from Korea and produces Readymade
Garments products by Thai cotton and then
those products to Canada.
1.Division of Labor and Specialization
 Foreign trade leads to the division of labor and
specialization at the world level. Some countries have
abundant natural resources.
 They should export raw materials and import finished
goods from countries which are advanced in skilled
manpower.
2.Optimum Allocation and Utilization of Resources
 Due to specialization, unproductive lines can be eliminated
and wastage of resources avoided.
 In other words, resources are canalized for the production
of only those goods which would give the highest returns.
3.Equality of Prices
 Prices can be stabilized by foreign trade.
 It helps to keep the demand and supply position stable,
which in turn stabilizes the prices, making allowances
for transport and other marketing expenses.
4.Availability of Multiple Choices
 Foreign trade helps in providing a better choice to the
consumers.
 It helps in making available new varieties to consumers
all over the world.
5.Ensures Quality and Standard Goods
 Foreign trade is highly competitive. To maintain and
increase the demand for goods, the exporting countries have
to keep up the quality of goods.
 Thus quality and standardized goods are produced.
6.Raises Standard of Living of the People
 Imports can facilitate the standard of living of the people.
This is because people can have a choice of new and better
varieties of goods and services.
 By consuming new and better varieties of goods, people can
improve their standard of living.
7.Generate Employment Opportunities
8.Facilitate Economic Development
9.Assistance During Natural Calamities
10.Maintains Balance of Payment Position
11.Brings Reputation and Helps Earning
Goodwill
12.Promotes World Peace
 Maximum Use of Natural Resources
 Availability of Goods
 Economics of Large Scale
 Stability in Prices
 Benefits to Consumers
 Development of the means of Communication
and Transport
 Discouragement to Monopolies
 Threat to infant industries
 Economic exploitation
 Endangers independence
 Misuse of natural resources
 Import of harmful goods
 World wars
 Trade and tariff agreements

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