Characteristics of International Trade

There are some specific characters on International / Global Trade.

Separation of Buyers and Producers:

In inland trade producers and buyers are from the same country but in foreign trade they belong to different countries.

Foreign Currency:

Foreign trade involves payments in foreign currency. Different foreign currencies are involved while trading with other countries.


Imports and exports involve a number of restrictions but by different countries. Normally, imports face many import duties and restrictions imposed by importing country. Similarly, various rules and regulations are to be followed while sending goods outside the country.

Need for Middlemen:

The rules, regulations and procedures involved in foreign trade are so complicated that there is a need to take the help of middle men. They render their services for smooth conduct of trade.

Risk Element:

The risk involved in foreign trade is much higher since the goods are taken to long distances and even cross the oceans.

Law of Comparative Cost:

A country will specialize in the production of those goods in which it has cost advantage. Such goods are exported to other countries. On the other hand, it will import those goods which have cost disadvantage or it has no specific advantage.

Governmental Control:

In every country, government controls the foreign trade. It gives permission for imports and exports may influence the decision about the countries with which trade is to take place.

Different National Groups:

International trade takes place between differently cohered groups. The socio-economic environment differs greatly among different nations.


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