Introduction, importance and reasons for International Trade

////Introduction, importance and reasons for International Trade

Introduction, importance and reasons for International Trade

Image credit energypress.eu

Image credit energypress.eu

ZIMSEC O Level Commerce Notes: Introduction, importance and reasons for International Trade

  • Trade is the buying and selling of goods and services in order to satisfy the needs and wants of consumers.
  • Trade between two countries is known as bilateral trade.
  • Trade between more than two countries is known as multilateral trade.
  • Both bilateral and multilateral trade are classified as international trade.

Why Zimbabwe Trades with other countries?

  • Zimbabwe does not have all it requires to feed its populace i.e. like most countries it is not self-sufficient.
  • It therefore buys goods and services from other countries in order to:
  • Get what it does not have due to climatic conditions for example raw materials such as cocoa.
  • Get what it cannot manufacture due to lack of technological expertise or differences in technology for example vehicles.
  • Access a wider rang of goods and services thus uplifting the standards of living.
  • Prevent shortages for example when there is a drought.
  • Obtain higher quality goods at lower prices than would otherwise be possible if they were manufactured locally.
  • Benefit from comparative cost advantage.
  • Get seasonal goods when they are not in season in Zimbabwe.

Zimbabwe also sells goods and services to other countries in order to:

  • Increase sales by widening its market thus creating employment for its people within and outside its borders.
  • Allow specialisation in the production of goods.
  • Get rid of excess goods it produces.
  • Obtain foreign currency which is required to pay for the import of goods and services.
  • Keep its local industries busy producing goods and thus also creating employment.
  • Force local industries to produce goods of high quality because international markets are competitive.
  • Foster peace and friendship with other countries.
  • Promote cultural, scientific and economic cooperation with other countries e.g. China.
  • Benefit technology by trading with more developed countries.

To access more topics go to the Commerce Notes page.

By |2017-01-17T11:19:34+00:00July 23rd, 2015|Notes, O Level Commerce Notes, Ordinary Level Notes|1 Comment

About the Author:

He holds an Honours in Accountancy degree from the University of Zimbabwe. He is passionate about technology and its practical application in today's world.
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