Question
Explain the concept of foreign trade and its types.
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Answer
Foreign trade is the exchange of goods and c services between two or more countries, Foreign trade is the trade across the j boundaries of a country.
There are three important types of foreign trade.
- Import trade : It is a buying of goods and services from other country by home country. Excessive import can have a negative impact on home country. E.g. India buying petroleum from Iraq, Kuwait, etc.
- Export trade : It is selling of goods and services by home country to another country.
Excessive export can have a positive impact on the home country. E.g. India exporting tea and spices to USA, China, etc. - Entrepot trade : It means buying of goods and services from one country and selling them to another country. E.g. England importing cotton from India, making readymade garments from it and selling them to Malaysia.
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