International Trade

International Trade

The exchange of goods and services between countries.

Exports

Goods or services sold to another country.

Imports

Goods or services bought from another country.

Balance of Payments (BoP)

Exports minus imports, measuring a country’s trade position.

Specialisation in Trade

Countries focus on producing goods efficiently, benefiting from economies of scale.

Free Trade

Trade with no government restrictions (e.g., tariffs, quotas).

Protectionism

Government actions that restrict trade to protect domestic industries.

Tariffs

Taxes on imports to make foreign goods more expensive.

Quotas

Limits on import volumes to protect local businesses.

Domestic Subsidies

Government payments to local businesses to reduce costs.

Embargoes

Total bans on specific imports/exports (often political).

Trading Bloc

A group of countries that trade freely while restricting non-members.

Preferential Trade Area (PTA)

Lower tariffs on selected goods between member countries.

Free Trade Area (FTA)

No tariffs between members, but each country sets its own external tariffs.

Customs Union

Free trade between members + common external tariffs.

Common Market

Free trade + movement of labour and capital between countries.

Economic Union

A common market with shared economic policies.

Benefits of Trading Blocs

Increased trade, economies of scale, easier access to labour and resources.

Drawbacks of Trading Blocs

Reduces trade with non-members; some members have less influence.

Cultural Differences in Trade

Different countries have unique preferences and customs.

Language Barriers in Trade

Poor translation can harm marketing.

Unintended Meaning in Marketing

A business message misinterpreted due to cultural differences.

Inaccurate Translation in Marketing

A miswritten slogan that confuses consumers.

Inappropriate Branding & Promotion

Ignoring cultural sensitivities can harm a brand.

Ansoff’s Matrix

A model for business growth strategies.

Market Penetration

Selling existing products in existing markets.

Product Development

Creating new products for existing markets.

Market Development

Expanding existing products into new international markets.

Diversification

Selling new products in new markets (most risk).

Why International Trade Matters

Drives economic growth, improves resource & technology access, creates new jobs.

Risks of International Trade

Trade imbalances, job losses, cultural & language barriers.