Advantages of International Trade

Foreign trade plays a vital role in economic development of a country, particularly in developing countries where levels of real national income and real per capital income are low. It proves helpful in increasing the rate of economic development.

1. Specialization:

According to the theory of comparative cost in foreign trade, every country can specialize in one or two commodities. Thus there is a possibility of all the advantages of division of labour

2. Availability of Goods:

Goods which are not produced or not available in a country can be received from other countries with the help of foreign trade.

3. Defense Need:

Every country requires arms or weapons for its defense. But all the countries cannot manufacture them from their available sources. So, they have to import modern weapons to meet their defense requirements.

4. More Employment:

The expansion in foreign trade creates jobs or provides better employment opportunities to the people of both countries.

5. Outlet for Surplus Products:

In he presence of foreign trade surplus products can be exported abroad

which helps in saving the wastage of goods as well as earning of valuable foreign exchange.

6. Market Expands:

The demand of commodity plays an important role in increasing the production of that commodity. Foreign trade expands the market and encourages the producers for more production.

7. Optimum use of Natural Resources:

Foreign trade helps a country to specialize in the production of those goods for which raw materials and other requisites are easily available in the country. Thus it leads to maximum use of its natural resources.

8. Removal of Monopoly:

Foreign trade discourages the monopoly. It is a common observation whenever any monopolist increases the price of any commodity then government allows the import of goods from other countries to reduce the price within the country

9. Import of Technology:

The developing countries can import latest machinery and technology from the developed world. Thus they can speedily break the vicious circle of poverty.

10. Ability to Face Calamities:

International trade helps a country to face natural calamities such as famine, earth quake, floods etc. the effected country can import the needed things. Other countries also offer help or aid for the survival of affected people.

11. Stability in Prices:

The surplus goods can be exported and the goods which are short in supply can be imported. Thus, the prices remain stable due to equilibrium in supply and demand.

12. Good Relationship:

All the countries are tied up in trade relations with each other due to foreign trade. So, foreign trade helps in improving social contacts and makes good relationship among them which is also useful for world peace.

13. Earning of Foreign Exchange:

Through foreign trade a country can eam foreign exchange, this foreign exchange can be used to remove poverty by importing technology and capital goods,

14. Better Living Standards:

Living standards can be improved with the help of foreign trade exports increase per capital income and imports fulfill the needs of people living in country. Thus, more foreign trade increases the volume of business and resultantly more Income leads to availability of goods and services, which means higher standards of living.

15. Agricultural Development:

Agriculture is the backbone of our economy. Foreign trade has played a very important part in the development of our agriculture sector. Every year Pakistan exports a large quantity of rice, cotton, vegetables and fruits to other counties. Foreign trade also helps in the availability of modern agricultural technology. fertilizers, pesticides etc.

16. Familiarity with Tradition:

The traders and businessmen visit the different countries due to foreign trade, so they can be familiar with the culture and tradition of other countries. Foreign trade also helps in industrial development because in developing countries ke Pakistan, there is a need of modern machinery, technology and industrial raw aerial. These can be imported through foreign trade. It also helps in expanding the market of industrial goods.

17. Best Quality, Reduced Cost:

Foreign trade helps in producing goods on large scale, so cost of production

becomes less. On the other hand goods of best quality can be produced with the use of best material, whether available in the country or abroad.

18. Availability of Power Resources:

Power resources play vital role in the Dfa Ho economic development of any country.

A country having inadequate resources, can import various power resources like oil, gas, coal etc from other countries.