What Is International Trade ?

International trade is defined as any economic activity in which both companies and people from different countries exchange products or services. These exchanges can be imports or exports.

There are different types of international trade , since it is defined by its degree of openness. In the least limited case, there is total openness, that is, freedom of trade without tariffs or restrictions. On the opposite side, there is autarky, given in countries that choose not to trade with other countries.

Between both extremes there are intermediate points, such as countries grouped by economic regions with freedom of trade between their borders, but with limits with other countries, among many other cases.

Today, in most countries, it represents a significant part of gross domestic product (GDP). This is a consequence of trade liberalization and the elimination of different tariff barriers, considerably increasing international exchanges of goods or services.

In fact, most economists globally agree that international trade helps boost the wealth of nations. In addition, the advantages of international trade for companies are numerous, with many businesses opting for it:

  • Improve competitiveness . Betting on global trade allows us to have suppliers that offer more competitive prices than those available in the local market.
  • Increase in profits . The previous points have a direct impact on that, since it is inevitable that, by improving the competitiveness of the company, the benefits will not increase.

Origins and a little bit of history of international trade

The beginnings of international trade date back more than 10,000 years ago, when people began to travel long distances to exchange goods. The barter of goods or services between different peoples is an ancient practice .

It should be noted that, towards the end of the 16th century, the British East Isles Company was already marketing its products with other companies in the world, becoming the most important worldwide in terms of international trade.

At the end of the 17th century, mercantilism emerged , promoting balanced trade that required the value of exports from a given country at any time to exceed that of imports in the same period.

This system paid special attention to the basic products that make up international trade. The export of finished products was considered beneficial, but the export of raw materials was frowned upon. The opposite also happened, favoring the importation of raw materials over finished products. Therefore, the system was very interventionist, and governments sought to manipulate international commercial activities in favor of their country of origin.

This led to the next stage of liberalism in the 18th century, during which Adam Smith wrote his popular book “The Wealth of Nations.” This book explains the important role of specialized production, a theory that formed the basis of David Ricardo’s theory of comparative advantage.

These steps were essential to ending the mercantilist system, but they were not consolidated until the late 20th century. Faster development, the evolution of transportation, technologies and legislation helped to do this.

Benefits of an international trade consultancy

You are clear about it, you are looking to expand your business to world trade, but you are not entirely clear where you should start. Marketing your business internationally has many advantages, but it can be overwhelming at first.

Currently, the legislation related to logistics and foreign trade operations is constantly changing. Knowing the laws of each country in which you want to expand is complicated.

Don’t worry, you can count on the help of an international trade consultant . This will be in charge of evaluating the difficulties you may encounter, looking for business opportunities and conducting research on the policies, competencies or cultural practices of the countries in question.