Foreign trade is called that economic activity that involves two or more nations and that basically consists of the exchange of goods and services, importing and exporting, with the aim of satisfying the internal and external needs of each country, and that cannot be satisfied in the country itself because there is no national production of that good or services that is purchased abroad.
Commercial activity between countries in which goods or services that they do not produce locally are sold or bought
This type of trade is very common and important in the world and by case it is regulated by various treaties, conventions, and agreements in force in the countries.
The Commerce is a economic practice that consists of buying, selling, or exchanging products, materials, services, among others, to obtain economic benefits in return.
In other words, put in simpler words, trade will involve exchanging one thing for another, which is usually money.
Meanwhile, the aforementioned economic activity can be carried out within a country, and involve individuals, companies within the same territory or geographic space, or on the contrary, it can be carried out outside the limits of a nation, a case that is formally known as foreign trade.
Its opposite, that is, the trade that takes place within the same country will be called internal or internal trade.
Each nation stands out for the production of certain types of goods and services, which in many cases is precisely what makes them recognizable in the world economic world, for example, Argentina in the production of lemons, but now, in some areas lack their own production and that is where they must go out to buy abroad in order to have those goods and satisfy their needs and demands.
Not even the richest world powers are totally self-sufficient, that is, they are capable of producing, and for instance, self-supplying all their demands.
So, it is a common practice for one country to sell to another what it does not produce, for example lemons in the case of Argentina, to those countries that do not have national production of this citrus fruit so relevant in gastronomy and other industries.
Source of foreign exchange income
The main characteristic of foreign trade is that it involves the entry into the country of foreign currency, foreign exchange, which means the generation of wealth for the state in question, because the country that exports its goods, services or products, and the You send to another country, which carries out the import action, you will receive in exchange for them a sum of money that corresponds to the currency held by the importing country.
If Argentina sells meat to the United States, will be exercising the role of exporting country and will therefore receive a payment in US currency, dollars.
This state of affairs allows a country to concentrate on the production of products or services which have raw materials and this then facilitates production at low costs and obtaining higher profits.
Possible in non-protectionist open economies
Now, it turns out to be a condition without equanom for this type of trade to take place, that the countries present an open economy, that is, that the country in question allows the entry of goods and services that come from other countries.
For example, it is important to mention that there are some countries that do not allow this entry in order to protect their industry, although of course, with this protectionist decision the possibilities of marketing other products that are not produced in the country are also reduced, because the others Countries will not want to buy from those who do not allow foreign products to be sold in their territory.
So, the basis of foreign trade is the effective presence of commercial freedom and the elimination of border prohibitions and limitations.
It should be noted that industrialization, the explosion of trade and the increasingly present economic globalization have agreed so that foreign trade reaches a unique importance and relevance for the countries due to the fabulous income of money that it proposes.
We must say that foreign trade demands the realization of cooperation agreements between countries, which are signed in diplomatic meetings in which the bases of mutual exchange are laid.
