Exporting

EXPPRIN
Understanding International Trade Theories

Agenda – Week 1

 International Trade  Classical Trade Theories
 Modern Trade Theories

 Trade Barriers
 Balance of Payment

 Incoterms

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What is International Trade?
International Trade

• International trade is the exchange of capital, goods, and services across international borders or territories. • This type of trade gives rise to a world economy, in which prices, or supply and demand, affect and are affected by global events.
Effect on economics • Political change in Asia, for example, could result in an increase in the cost of labor, thereby increasing the manufacturing costs for an American shoe company based in Malaysia, which would then result in an increase in the price that you have to pay to buy a pair of shoes at your local mall. • A decrease in the cost of labor, on the other hand, would result in you having to pay less for your new shoes.

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Benefits of International Trade Theory
International Trade

        

Enhances the domestic competitiveness Takes advantage of international trade technology Increase sales and profits Extend sales potential of the existing products Maintain cost competitiveness in your domestic market Enhance potential for expansion of your business Gains a global market share Reduce dependence on existing markets Stabilize seasonal market fluctuations

4

Risks of International Trade Theory
International Trade

Economic risks  Risk of concession in economic control  Risk of insolvency of the buyer  Risk of non-acceptance  Risk of protracted default i.e. the failure of the buyer to pay off the due amount after six months of the due date  Risk of Exchange rate Political risks  Risk of non- renewal of import and exports licenses  Risks due to war  Risk of the imposition of an import ban after the delivery of the goods  Surrendering of political sovereignty
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Risks of International Trade Theory
International