ADVERTISEMENTS: Although export increased but they did not contribute much to the development of the rest of the economy. Moreover, excessive dependence on exports leads to cyclical fluctuations in the advanced countries. During depression, terms of trade become adverse and their foreign exchange earnings fall steeply.
Table of Contents
What are the effect of international trade?
ADVERTISEMENTS: Although export increased but they did not contribute much to the development of the rest of the economy. Moreover, excessive dependence on exports leads to cyclical fluctuations in the advanced countries. During depression, terms of trade become adverse and their foreign exchange earnings fall steeply.
What is the difference between global trade and international trade?
International trade is one that involves only two or more countries wherein companies import or export the other’s products. “Global” is a word that is used to refer to issues and concerns of the entire world while “international” is a term that is used to refer to issues and concerns of two or more countries.
How does international trade help globalization?
The increase of international trade over the years has been a result of the globalization process. Thus, both consumers and companies can now choose from a wider range of products and services. International trade can stimulate economic growth of countries that are now so interconnected.
What are the advantage and disadvantage of franchising?
franchising-table
| Advantages | Disadvantages |
|---|---|
| Franchisees may be more talented at growing the business and turning a profit than employees would be | Franchisors earn royalties from sales. Franchisees earn money from profits. Achieving growth in both isn’t always possible, potentially causing conflict |
What are the terms of international trade?
Unsourced material may be challenged and removed. The terms of trade (TOT) is the relative price of exports in terms of imports and is defined as the ratio of export prices to import prices. It can be interpreted as the amount of import goods an economy can purchase per unit of export goods.
Why terms of trade is important?
If a country’s terms of trade improve, it means that for every unit of exports sold it can buy more units of imported goods. So potentially, a rise in the terms of trade creates a benefit in terms of how many goods need to be exported to buy a given amount of imports.
Why terms of trade deteriorate in developing countries?
Low Income Elasticity of Demand: There is predominance of the production of food crops in these countries. The increasing demand for manufactured goods results in more imports of such products at relatively higher prices. Consequently, the terms of trade remain unfavourable for the developing countries.