Chapter 8: International TradeClass 12 Geography — summary, notes, extra questions & MCQ quiz

Summary

International trade is the voluntary exchange of goods and services among countries across national boundaries, and it benefits both partners because no country is self-sufficient. Trade began with the barter system, whose difficulties were overcome by money, once represented by rare objects like cowrie shells and salt. Historically the Silk Route was an early example of long-distance trade; European colonialism added the cruel slave trade, abolished in the early nineteenth century, and after the Industrial Revolution industrial nations imported raw materials and exported finished goods. International trade rests on the principle of comparative advantage and on differences in national resources (geology, minerals, climate), population factors (cultural skills and size), the stage of economic development, foreign investment and transport. Balance of trade records the value of imports and exports; a country has a favourable balance when exports exceed imports and an unfavourable one when imports exceed exports. Trade may be bilateral (between two countries) or multilateral (with many). Free trade or trade liberalisation lowers barriers like tariffs, but countries must guard against dumping. The World Trade Organisation, which replaced GATT in 1995, sets the rules of global trade and resolves disputes, though it is criticised for favouring rich nations. Regional trade blocs encourage trade among neighbouring countries. The chief gateways of trade are ports, classified by cargo handled, location and specialised function.

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