Rajasthan Board RBSE Class 12 Geography Notes Chapter 11 World: International Trade
Introduction :
- Trade is an economic activity included in tertiary occupation.
- Trade is divided into two categories – national trade and international trade.
- The exchange of commodities and service across the national boundaries of various countries is called international trade.
- International trade is carried out between two or more than two countries.
- National trade is carried out among the internal regions of the same country.
History of International Trade :
- The ancient silk route is an early example of long-distance trade, which connected nearly 6000 km long road from Rome to China.
- Due’ to the development of seafaring warships, the trade between Europe and Asia developed.
- European colonialism began ‘slave trade’ a new form of trade, along with the trade of foreign commodities.
- After the world war, institutions like GATT came into existence for agreement on trade and tariffs, which later came to be known as World Trade Organisation.
Bases of International Trade :
- Variations in national resource (geographical structure, minerals and climate), popula¬tion Factors (cultural factors and population size), status of economic development, limit of foreign investment and transportation are the main bases of international trade.
- Trade volume, trade coordination, direction of trade and balance of trade are four important aspects of international trade.
- The gross value of commodities and services which are traded is known as trade volume.
- Balance of trade describes the commodities and services exported and imported by one country to another countries.
Types of International Trade :
- International trade is of two types :
(a) Bilateral Trade – Trade between two countries.
(b) Multilateral Trade – Trade among many countries. - Increased production, increase in national income, export of surplus, skilled utilisation of resources, division of labour and specialisation, expansion of markets, large – scale production, availability of commodities and services, uniformity in pricing and cultural benefits are the major benefits of international trade.
- The disadvantages of international trade include excessive exploitation of natural resources, singular progress of countries, foreign dependence, adverse effects of foreign competition and political slavery.
International Trade Organisation :
- GATT was the world’s first and most extensive international agreement which came into effect on January 1, 1948.
- World Trade Organisation, established on 15 April, 1995, is an international organisa¬tion which implements global trade and tariff laws among various countries of the world.
- The headquarters of World Trade Organisation is in Geneva (Switzerland).
- By December 2015, 164 countries of the world are the members of World Trade Organisation.
Regional Trade Groups - In order to develop international trade on a global level and to remove sanctions imposed on trade of developing countries, various regional trade groups are established in the world.
- The member countries of regional trade groups remove trade tariffs in the groups and encourage free trade. For example, ASEAN, OPEC, E.U., C.I.S., SAFTA, NAFTA, etc.
- India gave its assent in 1993, after implementation of the Duncle proposal.
- In comparison to year 2014-15, a negative growth is seen in India’s export value and import value, in 2015-16.
Glossary :
- Trade : The voluntary exchange of goods and services is known as trade.
- International Trade : When exchange of goods and services takes place between two or more than two nations, it is known as international trade.
- Tertiary Activities : The tertiary sector or service sector is the third of the three economic sectors of the three-sector theory. The others are the secondary sector (approximately the same as manufacturing), and the primary sector. In this sector, instead of production of tangible products, the commercial production of services is done.
- National Trade : The voluntary exchange of goods and services that is done within the boundaries of a particular nation is known as national trade.
- Goods Barter : Goods barter is a method of exchange by which the goods are exchanged for goods directly without using any medium of exchange, like token, debt or currency, for mutual profit.
- Silk Route : Silk route is the name given to the route which connected Rome to China. It was named so, because in olden days, merchants used to transport silk, precious metals, textile, spices and other expensive items from China and from intermediate locations of Iran and central Asia to Italy.
- Resource : Everything that is present in the environment of earth or other planets, which is useful to human is referred to as resource.
- Relief : Relief basically means the terrain of the outermost layer of the earth. It shows the difference in elevation of various physical geographical features in a given area, such as mountains, valleys, plains and plateaus, physical landscape, etc.
- Soil : The uppermost layer of the crust of the earth, which is loose, fragmented and useful for growing plants is known as soil. It contains such components as minerals, humus, moisture, air, etc.
- Climate : Climate means the usual condition of the temperature, humidity, air pressure, wind, rainfall, and other meteorological elements in an area of the surface of the earth for a long time.
- Mineral : A mineral is an element or chemical compound that is normally crystalline and that has been formed as a result of geological processes. It has a definite chemical composition and definite chemical and physical properties.
- Population : Population is the number of people living in a particular area.
- Transport: Transport is means or system of carrying people or goods or both from one place to another place.
- GATT : GATT stands for General Agreement on Tariff and Trade. GATT is a legal agreement between many countries, whose overall purpose is to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.
- World Trade Organization : WTO is an international organization which regulates the laws of international trade.
- Volume : Volume, or trading volume, is the actual amount (total number) of commodities that are traded during a given period of time. The gross value of commodities and services which are traded is called trade volume.
- Import : An import is a goods or service brought into one country from another country.
- Export : The term export means sending of goods or services produced in one country to another country.
- Balance of Trade : The balance of trade compares the value of a country’s exports of goods and services against its imports. This is of two types. More exports as compared to imports is positive or favourable trade balance, and its reverse is called negative or unfavourable trade balance.
- Bilateral Trade : A bilateral trade is the exchange of goods between two countries that facilitates trade and investment by reducing or eliminating tariffs, import quotas, export restraints and other trade barriers.
- Multilateral Trade : A multilateral trade is the exchange of goods between many countries that facilitates trade and investment by reducing or eliminating tariffs, import quotas, export restraints and other trade barriers.
- National Income : The income of a nation through different sources within one financial year is known as national income.
- Globalisation : Globalisation is the increasing interaction of people, states, or countries through the growth of international flow of money, ideas, and culture. This involves integrating economy of country with economies of other countries through free trade and free movement of capital and labour.
- Regional Trade Groups : Regional Trade Groups came into existence to remove restrictions of trade from developing countries and to maintain equality among local countries. It is a federation of such countries of the world among which a rationalised system of trade regulations work.
- Free Trade or Trade Liberalisation : Trade liberalisation is the removal or reduction of barriers on the free exchange of goods between nations. This includes removal or reduction of tariff obstacles, such as duties and surcharges, and nontariff obstacles, such as licensing rules, quotas and other requirements.
- Trade Deficit : A trade deficit arises when a country imports more than it exports. It is also called a negative balance of trade. It is one way of measuring international trade.