Log in or sign up to add this lesson to a Custom Course. Login or Sign up. Global tradealso known as international trade, is simply the import and export of goods trade services across international boundaries.
Goods and services that enter into a country for sale are called imports. Goods and services that leave a country for sale in another country are called exports. For example, a country may import wheat because it doesn't have much arable land, but export oil because it has oil in abundance.
A fundamental concept underlying global trade is the concept of comparative advantagedeveloped by David Ricardo in the 19th century. In a nutshell, the doctrine of comparative advantage states that a country can produce some goods or services more cheaply than other countries. In technical terms, the country is able to produce a specific good or service international a lower opportunity cost than others.
An opportunity cost system the benefit one gives up in making an economic choice. The classic example is guns and butter - domestic investment over defense spending. The more guns you produce, the less funds are available to invest in public schools and infrastructure, for example.
The more you invest in the domestic economy, the less you can spend on defense. Let's say that England produces more wheat per man-hour than Portugal, and Portugal produces more wine per man-hour than England. Consequently, England has a comparative advantage in producing wheat, and Portugal has a comparative advantage in producing wine.
In other words, England's opportunity costs for the production of wheat is lower than for the production of wine, and Portugal's opportunity costs are lower for the production of wine than for the production of wheat. Thus, England is better off producing wheat, selling it to Portugal system buying its wine from Portugal. Portugal, on the other hand, is better off selling its wine to England and buying its wheat from England.
What can we learn from this example? Global trade allows for specialization and lower costs to consumers. Countries can focus on what they are best suited to do - engage in activities with the lowest opportunity costs for them. Focusing on their comparative advantages means they can maximize production and efficiency, which leads to greater potential for profit and economic growth. Global trade can create economic wealth on a global scale as each country maximizes its revenue and growth by focusing on what it does best and saving money on imports that would be more costly for it to produce domestically.
A country generates revenue from exporting the excess goods and services that its domestic market doesn't need to other countries that have a different comparative advantage. The money it receives from the exports can then be used to import goods and services it does not produce from the countries that have a comparative advantage in the production of those goods and services - just like Definition and Portugal trading wine and wheat, but on a global scale with countless products and services.
Global trade can also reduce international conflict and war. It may not make intuitive sense at first glance, but think about it for a moment. Global trade creates long-term mutually beneficial relationships or a symbiosis.
If you start a war with someone who provides you needed goods, such as wheat or oil, you may have just shot yourself in the foot. In other words, global trade cultivates cooperation rather than conflict. A international barrier is anything that hinders trade. You can generally divide barriers to trade into two categories: Policy trade barriers are barriers to trade intentionally imposed by national governments. Primary policy barriers include:.
Tariffswhich are special taxes imposed on imported goods that make them more expensive. The purpose of a tariff is to make domestic goods that compete against imported goods more competitive.
Quotas limit the amount of imported goods that can enter a country within a certain period of time. Again, the intent is definition make it easier for domestic companies to compete. Product standards can also be used as a barrier to trade.
For example, some countries do not permit the import of genetically altered beef or wheat. This protects local farmers from competition from countries that produce genetically altered products. Whether this particular type of product standard is a pretext to protect local producers from trade competition is hotly debated. Natural trade barriers are barriers that are not artificially created that impede trade.
Geographical barriers, which can present a serious problem. Shipping across vast oceans involves significant costs, which adds to the cost of imported products. Trading partners that are geographically close have a distinct advantage. Information asymmetry is also a barrier to trade. Local companies know a lot more about their own markets than foreign companies seeking to export into the market.
Language and culture, as well as political and legal differences between countries, can make trade difficult. Countries with the same language and similar cultures and political systems will have an advantage in trading with each other because they will understand each other better than their competitors. Global trade involves the import of export of goods and services between international borders.
Each country can produce and export goods and services in which it has a comparative advantage and import goods and services in which it doesn't. Advantages of global trade include specialization, economic growth and reduction of global conflict.
Barriers to trade can be either policy driven or natural. Policy barriers include tariffs, quotas and product standards. Natural barriers include geographic barriers and information asymmetry. To unlock this lesson you must be a Study. Did you know… We have over 95 college courses that prepare you to earn credit by exam that is accepted by over 2, colleges and universities.
You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level. To learn more, visit our Earning Credit Page. Not sure what college you want to attend yet? All other trademarks and copyrights are the property of their respective owners. By Education Level College High School Middle School. Explore over 3, video courses. Find Degrees by Subject Agriculture Architecture Biological and Biomedical Sciences Business Communications and Journalism Computer Sciences Culinary Arts and Personal Services Education Engineering Legal Liberal Arts and Humanities Mechanic and Repair Technologies Medical and Health Professions Physical Sciences Psychology Transportation and Distribution Visual and Performing Arts.
By Level High School Diploma Associates Degrees Bachelor Degrees Master Degrees Online Degrees. Find a degree that fits your goals. Browse Schools by Degree Level Graduate Degrees High School Diplomas Certificate Programs Post Degree Certificates Undergraduate Degrees. Browse Schools Public Schools by State University Video Reviews. What is Global Trade? In this lesson, you'll learn about global trade and its advantages, as well as barriers to trade. A short quiz follows.
An error occurred trying to load this video. Try refreshing the page, or contact customer support. You must create an account to continue watching. Register for a free trial Are you a student or a teacher? I am a student I am a teacher. What is your educational goal?
Start Your Free Trial To Continue Watching. Get instant access to this lesson - and over 55, others. Learn Math, English, Science, and History with practice tests, quizzes and personalized coaching.
Back members login here. Are you still watching? Your next lesson will play in 10 seconds. Add to Add to Add to. Want to watch this again later? About Create Edit Share. Custom Courses are courses that you create from Study. Use them just like other courses to track progress, access quizzes and exams, and share content. Organize and share selected lessons with your class. Make planning easier by creating your own custom course. Add important lessons to your Custom Course, track your progress, and achieve your study goals faster.
Creating a Custom Course. Create a new course from any lesson page or your dashboard. Click "Add to" located below the video player and follow the prompts to name your course and save your lesson. Click on the "Custom Courses" tab, then click "Create course". Next, go to any lesson page and begin adding lessons. Editing a Custom Course. Edit your Custom Course directly from your dashboard. Name your Custom Course and add an optional description or learning objective.
Create chapters to group lesson within your course. Remove and reorder chapters and lessons at any time. Sharing a Custom Course. Share your Custom Course or assign lessons and chapters.
Share or assign lessons and chapters by clicking the "Teacher" tab on the lesson or chapter page you want to assign. Students' quiz scores and video views will be trackable in your "Teacher" tab. You can share your Custom Course by copying and pasting the course URL. Create an account to start this course today.
Recommended Lessons and Courses for You Related Lessons Related Courses. The Importance of the Global Market and Global Trade: International Trade Organizations and Trade Agreements. The Work Team in Contemporary Business: Forces that Affect Trade in Global Markets. What Is International Logistics? What is Free Trade? What is an Export? Importing and Exporting in a Global Market: What is Global Competition in Business? International Economic Environment in Marketing: New Trade Theory NTT: The World Trade Organization: Advantages and Disadvantages of Trade Protectionism.
How The Global Business Environment Affects Business: Test Practice and Study Guide. Intro to Human Resources. Global trade of goods and services are worth trillions of dollars each year. Definition of Global Trade Global tradealso known as international trade, is simply the import and export of goods and services across international boundaries.
Advantages Let's say that England system more wheat per man-hour than Portugal, and Portugal produces more wine per man-hour than England. Barriers A trade barrier is anything that hinders trade. Policy Trade Barriers Policy trade barriers are barriers to trade intentionally imposed by national governments. Primary policy barriers include: Start a FREE trial No obligation, cancel anytime. Want to learn more? Select a subject to preview related courses: Natural Trade Barriers Natural trade barriers are barriers that are not artificially created that impede trade.
Lesson Summary Global trade involves the import of export of goods and services between international borders. Earning College Credit Did you know… We have over 95 college courses that prepare you to earn credit by exam that is accepted by over 2, colleges and universities. To learn more, visit trade Earning Credit Page Transferring credit to the school of your choice Not sure what college you want to attend yet?
Browse Articles By Category Browse an area of study trade degree level. Recommended Articles Related Recently Updated Popular Global Trade Compliance Advisor Job Description Bachelor of Science in Global Business Management: Degree Overview Internet Specialist: Trade School Diploma Program Overview International Trade Career Information and Education Requirements Internetwork Engineering: Trade School Diploma Program Summary Top Ranked School for International Business and Trade - San Diego, CA How to Become an International Trade Specialist: Trade School Diploma Program Summary Electronics: Trade School Diploma Program Overview Java Programming: Trade School Diploma Program Overview.
Office Jobs for People Without a Degree How to Become an Information Technology IT Specialist How to Earn a Bounty Hunter License: Career Information for a Degree in Environmental Studies Audiologist Assistant Programs Education and Training Options Makeup Schools Portland Oregon Forensic Artists Education Requirements and Job Description Classes in Merchandising Management.
You are viewing lesson Lesson 9 in chapter 4 of the course:. Help and Review 11 chapters lessons 1 flashcard set. Marketing Philosophies and Ethics Business Marketing and Marketing Segmentation and Product Marketing Managing a Product and Retailing Promotion, Advertising and Public Definition and Pricing Strategy: Certificate Program DSST Introduction to Business: Certificate Program CLEP Introductory Business Law: Certificate Program Human Resource Management: Help and Review College Macroeconomics: Homework Help Resource Introduction to Macroeconomics: Help and Review DSST Computing and Information Technology: Browse by Lessons Leadership Communication: Accounting Fundamentals TExES Business Education: Economics TExES Business Education: Latest Courses Certified Payroll Professional CPP: Latest Lessons What is a Deferred Payment?
Popular Courses Astronomy Intro to Astronomy 8th Grade World History Textbook Ohio Assessments for Educators - Adolescence to Young Adult - Assessment of Professional Knowledge: Popular Lessons Using Double Object Pronouns in Spanish To Kill a Mockingbird Chapter 2 Questions Subject-Verb Agreement Lesson Plan Exquisite Corpse Lesson Plan Birmingham Adult Education Multiplication Games for Kids Math Writing Prompts Creative Writing Exercises for Beginners Mercantilism Lesson Plan How to Get Tuition Reimbursement How to Study for a Placement Test for College Dinosaur Activities for Kids.
Like this lesson Share. Browse Browse by subject. Upgrade to Premium to enroll in Principles of Marketing: Enrolling in a course lets you earn progress by passing quizzes and exams. Take quizzes and exams.
Earn certificates of completion. You will also be able to: Create a Study Trainer Create custom courses Get your questions answered. Upgrade to Premium to add all these features to your account!