InfoKekinian.com – Most of us are of course familiar with international trade and what we know is that no single country can meet all the needs of its population without assistance or other cooperation.
Even though tax revenue is the largest available source of state funds, it cannot be used as a benchmark or the main source for meeting the needs of the population.
Therefore, the state will try to meet the needs of its population through various actions, including foreign loans and international trade.
Those of you who are still in high school and choose IPS as your major will certainly learn this.
In this article, we will invite you to get to know international trade, complete with understanding, purpose, and benefits. So, watch this article to the end, ok!
Definition of International Trade
In knowing international trade, of course we need to know the meaning or definition of international trade.
Where international trade is the exchange of goods and services between countries. International trade is also known as international trade and has been around since the mid-twentieth century.
Specifically, international trade can occur when two countries carry out trading activities that have been agreed upon by both parties.
For example, when buying imported goods from certain markets. According to the expert, Wahono Diphayana introduced the concept of international trade in addition to mutual understanding.
According to Wahono, international trade is a business transaction between many parties including more than one country, individuals or groups can be involved in international trade.
From these international trade operations, cooperative economic relations between countries are developed. There are three different types of economic relationships, including:
- A country exchanges results or output with other countries that have developed cooperation
- The development of economic relations between countries in the form of debt
- There is an exchange of production flows and production facilities.
As previously stated, international trade policies have existed for thousands of years and have had a positive impact on economic, social and political interests and the sustainability of a country.
International trade is one of the main contributors to growth Gross Domestic Product or GDP in several countries.
Participating countries classify international trade into three categories, namely bilateral international trade, regional international trade, and multilateral international trade.
Meanwhile, international trade is subdivided based on its form, including export and import, consignment, package transactions, cross-border, and others.
International Trade Purposes
The main objective of international trade is to increase Gross Domestic Product or GDP.
This means that the purpose of international trade is to increase the total value of the production of goods and services sold from one country to another during one year.
In addition to these main objectives, international trade also has the following five objectives:
1. Increase the State's Foreign Exchange
The first objective of the international trade policy is to grow the country's foreign exchange. The way to do this is to import or export goods from the inside out and vice versa.
An increase in foreign exchange rates will result in a number of consequences.
2. Economic Growth
Economic growth or an increase in gross national product (GDP) is generated by the factors of production owned by citizens who are domiciled in the country or abroad.
Since citizens living in the country or abroad are not included in GDP, it is the factors of production alone that are responsible for this growth.
3. Affecting the Stability of Prices of Export Goods
Price stability is a government strategy to maintain current prices inflation starting to increase. Since inflation is an increase in the availability of money, it can lead to an increase in the cost of products.
4. Labor Existence
The existence of the workforce is one aspect that can affect the smooth running of all activities related to the procurement of goods and services.
Economic expansion that occurs in a country can make exporting companies receive many orders, thus the company will need additional workers to meet consumer demands.
By adding personnel, the company also offers new job prospects that can contribute to reducing the unemployment rate in the country, thereby benefiting both parties.
5. Meeting Needs in Other Countries
International trade cooperation can make other countries that do not have the goods or services needed can be fulfilled.
Indonesia, for example, is one of the Asian countries that processes soybeans into tempeh, in contrast to Europe and the United States.
Therefore, by partnering with European and American countries, these countries can meet their needs for plant-based food, especially soybeans which are processed into tempeh and vice versa.
International trade is carried out and agreed by two countries that work together to supply the needs of other countries when they cannot produce their own needs.
The reasons for not being able to produce these demands can vary, one of which is the climate of a different place.
6. Obtain Internal and External Benefits
Of course, this international trading strategy seeks both internal and foreign advantages.
As previously stated, the state will not be able to meet the needs of its population if it does not interact with other countries and only relies on funds or budgets originating from the state.
Therefore, in order to respond to the demands of the population, the state will try to take advantage of international trade cooperation agreements between countries.
The internal advantage in question is the advantage that can be owned by a corporation, such as the profit obtained from a large number of orders for goods or services from abroad.
While external benefits are special benefits obtained through internal activities that are used to increase the utilization of production factors.
7. Expanding the Market
International trade aims to enable a company in that country to run its production machines to the fullest and to be able to sell its stock of products without worrying about overproduction which could result in lower prices for the products and services supplied.
8. Transfer of Modern Technology
International trade is also carried out to benefit from current technology that cannot be produced or obtained domestically, so cooperation with other parties is necessary.
The transfer of contemporary technology in question could be in the form of machines or vaccines, because Indonesia is currently unable to manufacture and evaluate the efficacy of vaccines for the Covid-19 virus.
As a result, other countries offer Indonesia vaccines for production purposes, etc.
Benefits of International Trade
After getting to know international trade and its goals, you also have to know the benefits that will be enjoyed by a country that cooperates with international trade.
International trade policies have several advantages, one of which can provide opportunities for other countries to utilize their resources proportionally.
In addition, through international trade, two countries that have established cooperative relations can develop mutually beneficial economic relations.
No country will lose its resources as a result of international trade, which allows every individual to enjoy a higher standard of living.
International trade also plays an important role in contributing to a country's GDP and in trade growth, which can have a beneficial effect on a trading country's GDP growth.
Nazarudin Malik outlines a number of additional benefits that can be obtained by countries involved in international trade cooperation, including:
1. Forming friendly relations between countries
By fostering cooperation between countries, these countries can build friendly relations with other countries.
The establishment of friendship between these nations allows for the expansion of cooperation in other fields or sectors, such as in the fields of culture, politics and the military.
2. Can Create Efficiency And Specialization
International trade can cause a country to specialize in one sector of the economy.
This means that countries that develop such cooperation will have citizens with unique capabilities and characteristics.
So that it can develop goods and services that can be sold which can be exported to other countries.
3. Can Increase the Prosperity of the Country
Cooperating in international trade operations can generate wealth for a country.
The activities of economic actors, such as producers, government and consumers, show signs of wealth.
The three parties described by these indicators of prosperity will undoubtedly benefit from international trade policies.
For example, producers will thrive when they can increase their income by exporting their commodity.
As well as customers who will prosper because of the ease of obtaining a product, and the government will prosper because it will receive foreign exchange.
4. Can Reduce Unemployment
As discussed earlier, if a manufacturer receives a large number of consumer orders and requests, it must hire additional personnel to complete the task effectively.
As a result, producers will create new jobs and can reduce the country's unemployment rate.
5. Transferring Knowledge and Technology
International trade allows countries to sell commodities based on superior technology, such as modern tools and equipment, to those who need them more.
This will accelerate the mobilization of technology in importing countries.
6. Can Stabilize Prices
International trade can indirectly stabilize prices in the domestic market of certain countries.
Importing commodities is the key to overcoming the scarcity of goods that causes high prices.
Conversely, if a country has an oversupply of commodities, the prices of those goods will fall, which can be countered by exporting goods with excess stocks.
Disadvantages of International Trade
The following are the disadvantages that can be felt if you take part in international trade:
- The availability of imported goods in the domestic market can hinder the expansion of the domestic industrial sector
- Imported goods with prime quality and low prices encourage consumption
- To meet the needs of the global market, natural resources will be exploited
- Too dependent on research and technology as well as foreign finance, hampered industrial progress
- Small businesses fail as a result of unhealthy industrial competitiveness.
Examples of International Trade
To help you better understand the concept of international trade, here are some examples of activities related to international trade that need to be considered, including:
1. Export International Trade
Indonesia regularly exports, one of which is exporting natural resources such as lobsters.
Indonesia often exports natural resources such as palm oil, spices, coffee and sand to neighboring countries, apart from lobsters.
In addition to government exports, private companies and micro-enterprises can also export. The export of locally made clothes with unique patterns and designs is one example.
Small businesses can export goods because there are several shipping services that make it easier to send goods abroad.
In addition to sales channels such as online marketplaces, this also makes it easier for micro businesses to advertise their products.
2. Import International Trade
In contrast to exports, international trade in imports involves purchasing goods and services from other countries.
Apart from exporting regularly, Indonesia also frequently imports to meet the needs of its population.
Although sometimes there are positives and cons, Indonesia often imports food products such as fruits and rice.
3. Barter International Trade
Bartering is a way to obtain goods or services by exchanging them for a nominal or price that corresponds to the goods being bartered.
When a country exchanges its natural resource output for commodities it cannot produce or obtain, this is an example of barter.
Such as trade in palm oil for military purposes, etc. International trading activities involving barter must be regulated by agreement between the participating countries.
4. International trade in consumption
Consumption-based international trade is carried out by selling products in the free market.
The consumption in question includes not only the sale or purchase of consumables, but also the exchange of non-consumables.
By conducting an auction on a commodity, country or party with the highest bidder, for example, the right to acquire the product and the product itself can be sold freely without exception.
Factors Driving International Trade
International trade includes not only the export and import of goods, but also the use or utilization of various trade-related services, such as transportation, payments, international policies and governments of other countries.
International trade must be based on mutual trust and profit. The following are factors that influence the occurrence of international trade:
1. Differences in Natural Resources
There are disparities in resources, climate, and quality of human resources, giving rise to differences in the quantity and quality of production.
Therefore, international trade must be carried out so that the quantity and quality of production in a country can operate efficiently.
2. Development of Science and Technology (IPTEK)
Each country has unique and diverse scientific and technological developments.
Because this is what motivates nations to carry out international trade so that the development of science and technology is not left behind from other nations.
3. The Occurrence of Excess Production Requiring Business Expansion
If a country has additional output (goods), it is better to sell it to other countries.
Who knows, maybe other countries have a demand for this product, and the country that sells its surplus output will benefit.
Such circumstances can be a stimulus for international trade.
4. Citizens of other countries have an interest in the same product
The growth of globalization does not rule out the possibility that there will be foreigners who prefer original products.
With these goods, international trade must be carried out to fulfill the desires or preferences of the residents of that country.
5. There is a desire to establish cooperation with other countries
One of the collaborations that can be carried out with other countries is international trade, because international trade provides the same benefits for several countries.
With this cooperation, international relations can run smoothly.
6. The Advancement of Telecommunications, Information, and Transportation
Information accessibility makes it easy to understand the socio-cultural life of the population of various countries.
If the country and the country's culture are well-known in other countries, residents of that country will be able to visit the country, thereby benefiting domestic tourism.
7. Expanding the Market
By enlarging the market, household products can be exported to other countries, thus providing benefits for the country which can be converted into greater income for the state treasury.
Therefore, each country must develop its market carefully and comprehensively. By focusing on these motivating elements, international trade can encourage a country to create unique or superior goods.
In addition, international trade helps improve markets so that goods are easily sold and developing countries can acquire industrial skills from developed countries.
Factors Inhibiting International Trade
Despite the fact that international trade has existed for centuries, it is currently facing many obstacles.
There are many barriers to international trade that arise from a variety of causes. The following are factors that limit international trade:
1. Different Exchange Rates
Each country has its own currency, and each currency fluctuates according to market dynamics. Thus, a country's currency only applies within its borders.
Because of this, international trade is constrained by the difficulty of making transactions and making payments.
2. International Economic Policy
Several countries have instituted free trade. Even so, international trade will be hampered if a country implements a policy of import restrictions.
In other words, import restriction policies can inhibit imports of goods into the country.
3. Occurrence of Conflict in a Country
In this case, the struggle that is being faced, such as political anarchy, riot war, etc. The process of international trade will be affected if a country is involved in a conflict.
4. Export and Import Activities Take Too Long
International trade is very dependent on export and import activities. However, these activities must pass import and export duties in a country, which slows down export and import operations.
International trade is hampered by the long process of export and import.
5. Low Quality of Human Resources
High quality human resources will produce an optimal production process. If a country lacks abundant natural resources, it can optimize its human resources.
Therefore, the lack or absence of competent human resources becomes an obstacle to international trade.
6. Regional Economic Organization in a Country
Regional economic clusters have grown significantly in recent years.
However, this development became an obstacle to international trade because only member countries of the organization were granted access to international trade.
Here we have summarized some frequently asked questions:
What are the characteristics of international trade?
The following are characteristics of international trade:
- The payment is in foreign currency according to the agreement
- It has a broad scope and knows no national boundaries
- Disputes on trade will be resolved by international law
- Have special quality standards and must be met, such as ISO 4000, ISO 9000, etc.
What Are the Positive Impacts of International Trade?
The following are the negative impacts of international trade:
- Drive in economic growth
- Become a source of foreign exchange for the country
- Adding or opening jobs
- Strengthening relations between countries.
What are the Negative Impacts of International Trade?
One of the negative impacts of international trade on the product side is the tendency for both developing and poor countries to depend quite heavily on developed countries for factors of production related to technology.
That's a little information on getting to know international trade that you need to know, complete with goals, benefits, to supporting and inhibiting factors.
And we can conclude that international trade plays an important role in every country, because international trade is one of the ways to meet the needs of the people of each country.
And of course this international trade is carried out with several factors that need to be considered so that unwanted things don't happen later.