What is foreign trade?
Foreign Economic Activity is a foreign economic activity, a key component of the international market. Let's talk in more detail about what foreign economic activity is, and also consider the directions of foreign trade.
What is foreign trade: the meaning and essence of the concept
Definition of term
Foreign economic activity (abbreviated FEA)- this is one of the varieties of economic activity, the feature of which lies in the complete orientation of the organizational, financial, production, and economic components to the external market.
In simpler terms, explaining what a foreign trade is, it can be said that this is the exchange of services, goods or information between subjects and objects of trade on the international market.
FEA directions
- Foreign trade activity is a systemcommodity-money relations arising between participants in international trade. The latter has a number of advantages, among them: the development of mass production; stimulation of technology improvement (including production); the growth of production and competition, which leads to improvement; the accumulation of capital, conducive to industrial, industrial development, and so on.
- The international division of labor (MRI) - that is,specialization of countries in the world market for the production of certain goods, the provision of services, the performance of some work. This is usually due to the presence in each country of the optimal conditions (for example, climate, financial); resources (cheap labor, the availability of materials for the manufacture of something, etc.) for a given production. MRI allows individual states not only to meet their needs through the production of certain material goods, but also to obtain a good income by exporting production results to other countries.
- Production cooperation. Association of several participants of the world market for the production of goods / services, performance of work, supply of information. At the same time, each country invests in its available resources. The results of this activity are also used both to meet domestic demand and for the benefit of all participants in the export sales association.
- Financial-credit and currency operations. This area of foreign economic activity includes a broad list of relations. This includes international money transfers, and lending, issues related to the import and export of valuables, currency exchange, investment and so on.
Forms of foreign trade activities
Based on the directions of foreign economic activity, the following forms of foreign economic relations can be distinguished:
- Trade. Includes the exchange of products for both industrial and public consumption, as well as the purchase and sale of intellectual property (engineering, licenses, etc.).
- Provision of services. On the international market, they are provided by such subjects of foreign economic activity: banks, insurance companies, travel companies, logistics organizations and so on.
- Joint production, mutually beneficialcooperation. All spheres of human activity are decisively affected: medicine, science, culture (for example, joint production of films), heavy and light industry, agriculture, and so on.
You can learn more about the meaning of other terms from the articles in the Definitions section.
