Demand and Supply

Import and Export

In the recent decade, the world has seen an international trade boom unlike any other in history. Most large corporations earn a great portion of their revenues from their overseas ventures. And many nations owe a large share of their gross national product to the output of firms based beyond their borders.

In the age when many business people are thinking globally, it is just as important to understand the working of the world economy as it is to understand our national economy. Fortunately, the same concepts of supply and demand, deficit and surplus also apply to international business. They just manifest themselves differently.

There are two sides to every trade relationship: buying and selling goods. In international trade, those who buy are importing goods or services from foreign sources; those who sell are exporting products to customers abroad.

The main difference between domestic trade and international trade is the use of foreign currencies to pay for the goods and services crossing international borders. Although global trade is often added up in euros and US dollars, the trading itself involves various currencies.

Whenever a country imports or exports goods and services, there is a resulting flow of funds: money returns to the exporting nation, and money flows out of the importing nation. Trade and investment is a two-way street, and with a minimum of trade barriers, international trade and investment usually makes everyone better off. The balance of trade (the import-export balance) is determined by the relationship between import and export.

In an interlinked global economy, consumers are given the opportunity to buy the best products at the best prices. By opening up markets, a government allows its citizens to produce and export those things they are best at and to import the rest, choosing from whatever the world has to offer.

Notes:

overseas ventures – иностранные компании, предприятия

domestic trade – внутренняя торговля

currency – валюта

better off – обеспеченный, состоятельный

balance of trade – торговый баланс

Unit 6