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Introduction of International Trade Economics

International trade economics is exchange of goods, capital & services across international borders and territories. In most of countries, it is shown as a significant share of gross domestic product also known as GDP, While international trade has been present throughout the previous history, its economic, political and social importance has been on the rise in recent centuries. Industrialization, globalization, multinational corporations, advanced transportation and outsourcing are all having a major impact on the international trade system and increasing international trade is very crucial to the continuance of the globalization. Nations would be limited to the services and goods produced within their own borders, without international trade.

The difference between international and domestic trade is that factors of production e.g. as labour and capital are typically more mobile within a country than across countries. Thus we can say that international trade is mostly restricted to trade in services and goods, and only to a lesser extent to trade in labor, capital or other factors of production. Then trade in services and goods can serve as a substitute for trade in production factors.

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The study of international trade economics involves defining models, Ricardian model, Heckscher-Ohlin model, Specific factors model, Gravity model, New Trade Theory, Risk in international trade, balance of trade, international business, international trade law, internationalizationand, Market Segmentation, Political risk, Trade finance and many others. The study of various models is very important in international trade economics.