Foreign Trade

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The exchange of goods, services and capital between the countries of the world is called foreign trade. In today’s world; Foreign trade is necessary in order to meet the endless human needs with limited resources.

Globalization, industrialization, the increase in air, sea, land and railway transportation, the development of technology are very effective on foreign trade. Foreign trade is slightly more expensive than domestic trade. The arrival or departure of a good or service abroad requires additional costs.

Thanks to the abundance of raw materials, suitable cheap labor, advanced technology and industrialization in some countries, some products are produced at more affordable prices. Surplus products and goods can be consumed in the domestic market or sold abroad with appropriate agreements. Some goods and services can be purchased abroad at a more affordable price than the domestic production cost.

There are three types of foreign trade.

1.) Export: The sale of goods and services produced in the country abroad, to other countries is called export. For example, Turkey exports textile products to many countries in the world.

2.) Import: It is the purchase of goods and services produced in another country by our country. For example; Like mobile phone imports…

3.) Transit Trade: It is the export of the imported product.

When the amount of exports meets the amount of imports, a foreign trade balance is formed. Of course, it is desirable that exports are more than imports. It shows the country’s foreign trade success. However, it is also possible that there is a foreign trade angle. The solution to this is to increase production and exports within the country.

Benefits of Foreign Trade

1.) Exporting countries must ensure that the goods and services they sell are of the same quality at all times. This ensures stability and access to quality goods and services all over the world.

2.) Thanks to the competitive environment, the variety of goods and products increases. Consumers get the chance to choose from a large number of products at different prices.

3.) As consumers can reach better quality goods and services thanks to imports, their living standards increase.

4.) Imports and exports help countries to develop and grow. It provides an increase in Gross National Product and per capita national income.

5.) Thanks to foreign trade, employment within the country increases. Unemployment and poverty decrease. It encourages the opening of new factories and businesses.

6.) Production of quality goods for foreign trade increases the reputation of countries in the eyes of the world. The effort to protect the reputation also brings stability in quality.

7.) Through Foreign Trade; Technology transfer, trade agreements, warm economic relations bring countries closer. It contributes to world peace. In difficult times, cooperation between countries increases.

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