All these above mentioned definitions commonly emphasise this fact that any countries trade with the

other or trade among nations and crossing the border is termed as international trade. The international trade has some distinctive features also in comparison to domestic trade. DISTINCTIVE FEATURES OF INTERNATIONAL TRADE It is true that basically both types of trade : international trade as well as internal trade have common features and characteristics of trade activity. So many international economists are of the view that international trade is only a big and special form of domestic trade. According to famous Swedish economist Prof. Bertil Ohlin. "International trade is only a special case of Inter-regional trade". Economic transactions between countries are not different in nature from the domestic economic transactions. Exchange of goods takes place between different parts or regions within a country. Similarly, capital and labour move from one region to another region within the same country. In this respect, international trade may be regarded as an extention of internal trade. There are however many points of similarities and differences between these two types of trade. These are discussed below: INTERNATIONALTRADE AND INTERNALTRADE : A COMPARATIVE STUDY. Those economists who are of the views that basically both types of trade have same characteristics. They do not give much emphasis on political boundaries and these national frontiers also change from time to time India, Pakistan, Bangladesh and Sikkim are the conspicuous examples. Prior to 1947, Pakistan was not in existence upto 1971, Bangladesh was a part of Pakistan. Sikkim was firstly a separate nation but now it is part of India. So with change in the national frontier, the basic economic conditions of these nations remained unchanged though the trade between these countries has been transformed into international trade. On the following grounds we could establish equality of these two trades. SIMILARITIES IN INTERNATIONAL TRADE AND INTERNAL TRADE i. Objectives of the Trade - All trade activities are guided by the profit motive. There is no distinction on the basis of this motive that each entrepreneur will try to maximise his return whether the trade is internal or international. ii. Voluntary Transactions - In both types of trade, all parties involved are not under pressure and compulsion. Abiding by all regulations, they undertake voluntary and free transactions. iii. Transactions of Goods - In both trades, parties undertake the transactions of necessary goods which they require. iv. Two Parties - There are two parties: buyer (importer) and seller (exporter) in both types of trade. v. Similarity in Nature - Nature of both trade is same. The basis of trade in both the cases is division of labour and specialisation due to which there will be difference in production and prices. vi. Optional Bargain - Trade is always voluntary and optional bargain whether it is internal or international. vii. Sales and Marketing Efforts - In the age of competition, in all types of trade activities in order to have success and to attract more and more customers, the parities have to undertake huge efforts in the form of advertisements, sales promotions and better customer services.

viii. ix.

Common Commercial Services - In all trades, common commercial services in the form of banking, insurance, communication, transportation and godown etc. are common. Development of Cultural and Social Relations - As the trade between different regions develops, the social and cultural relations. The international trade also develops the same and people come together through trade visit and exchange of customs and usage with different tastes and through this process they create good cordial political environment throughout the world.

x.

Application of Comparative cost advantage theory - In both trades, this classical theory of trade is applied because a region and a country produces those goods in which they have an advantageous position or low cost of production. Advantageous to Both Parties - In both trades, both trading parties get benefits of trade as they supply the necessaries to each other. If any other party provides the necessaries without benefit it will be not be termed as trade. We will treat it as aid or assistance. Similarity in Operations - In both trades, the basic activities and operations are same. Both parties decides the terms of trade in relation to quality, quantity, price, mode of payment, delivery means, transportation, insurance and other charges etc. Division of Labour and Specialisation - Both trades are based on division of labour and specialisation. Each region or country produces only those goods in which they are famous^and have specialisation.

xi.

xii.

xiii.

DISSIMILARITIES IN INTERNAL AND INTERNATIONAL TRADE Though basically there is no fundamental difference between these two types of trade. Though many economists have pointed out some grounds on which these two trades could be distinguished. Main points of dissimilarities could be as follows: 1. Difference in the mobility of Labour and Capital - Generally, labour and capital is more mobile in the country in comparision to their mobility in other parts of the world. Due to this difference in mobility in country the cost level remains the same while there will be changes in price and cost level in other countries. This will also lead to specialisation of production. 2. Difference in the Laws of Returns - In one country there is uniform application of the rules, regulations and government policy due to which cost strcture will remain same and identical whereas in different countries due to different production structures, there will be differences in cost. This will result in the difference in the laws of returns. 3. Difference in Natural Resources and Geographical Conditions- All countries of the world differ on this ground so there will be different output and production with difference of cost. Some countries have highly fertile land , abundant natural and geological resources and they will have an edge over other countries only due to natural and geographical conditions. 4. Difference in Monetary System - All the countries of the world have adopted different monetary systems and they have different monetary units with different value. In one country we have one single monetary unit for making all types of payments so in internal trade, the trading parties do not face much difficulty in settling their dues whereas in international trade, the trading parties have to face payment problems due to existence of several monetary units and in international market. These different units are also not freely convertible due to imposition of several restrictions. There is also lack of stability in their values. All these factors differentiate the international trade with the domestic trade. 5. Difference in International Monetary Institutions - In internal trade, there are some financial and non-financial institutions which help in promoting trade but in international market, there are a number of international economic and monetary institutions which highly influence the international trade in addition to the national institutions. The parties involved in the international trade have to take the help of a number of specialised institutions like Exim Banks, IMF, World Bank, IFC, UNCTAD and WTO etc. 6. Difference in National Policies - All the countries of the world adopt different types of economic policies in relation to fiscal, monetary, wages, income, social security, education, trade and commerce. While in one country there is no such

complexity due to uniform and single policy. The parties involved in international trade have to know all different policies of different countries for success in international trade. 7. Difference in Commercial Laws - In one country the laws governing trade are uniform and simple while different countries have varied and complex commercial laws which make the international trade more complicated in comparison to the internal trade. 8. Obstacles to the Import and Export of the Commodities - There are a number of hurdles and restrictions which are being imposed by different countries in order to protect their interests and these restrictions make the international trade much difficult and complex. Though there are a number of agencies like WTO who advocates for free trade but practically the entire world economy is still in the grip of protectionism. 9. Separation of the Markets - The international markets are situated throughout the world and there are a number of differences in these separated and highly scattered markets in the form of geographical distance, language, taste and interests, fashions, terms of trade, customs and usage etc. 10. Difference related to classes - The internal trade is nation but international trade is among different classes of different nations. In the words of Fredric List "Internal trade is among ourselves while international trade is between ours and all others." 11. Different Political System -All the countries of the world are not ruled alike. They have different political systems. According to their different political set up they are either capitalist, communist, mixed, autocratic, democratic or others and all these different political set ups pose different types of problems in the field of international trade. 12. Different Business Customs-All countries generally have different and varied business and commercial customs and usages. They have different religions, faiths and social traditions. Some countries like western world are Non Vegetarian while other Vegetarian from countries like muslim world prohibit interest transactions while other countries not. For success in international trade, the parities should know these different customs. 13. Difference in Objectives- Generally, all trade activities are guided by the single motive of profit but there are several instances in which this economic motive viz to earn profit is surpassed by non-economic motives. For many political motives and to capture the market in future, the parties adopt a policy of selling their products below their cost. This tendency in international market is called "dumping." 14. Difference in Weights and Measures- In one country, we have uniform and standardised weights and measures but in international trade we have to know different measures and weights prevalent in different parts of the world. 15. Difference in distance between buyer and seller - It is generally argued that distance between buyer and seller is more in case of international trade in comparison to internal trade but it is not true in all cases, it couk^be reverse also. For example, trade between the traders of Amritsar and Lahore is regarded international trade and trade between traders of Jammu and Trivetndrum is internal but as fas as distance is concerned , distance is more tri case of internal trade. 16. Difference in Stastical Information- In international trade, for many purposes and reasons a country keeps the proper record of its international trade but for domestic trade there is no such urgency to have the trade statistics. In our country, we have established a specialised agency for this purpose "The Directorate General of Commercial Intelligence and Statistics (DGCI&S). This agency keeps systematic record of our international trade in huge and voluminous periodicals particularly, directions and compositions of India's trade.

17. Difference in Terms of Trade - In international trade, the terms of trade remain

stable while there are high fluctuations in international trade due to change in economic and political conditions. For each transaction in international trade, the parties have to predetermine the terms of trade. From national point of view, the terms of trade are not so important but in international trade, they have much significance because the adverse terms of trade have overall adverse effects on our balance of trade and ultimately, the balance of payments. 18. Problems in Payments - In internal trade, there are less problems related to payment because stet payments are designated in one single domestic currency. But in international trade we face number of difficulties due to number of monetary units with different values and these values also fluctuate in foreign exchange market frequently. 19. Existence of Trade and Exchange Control - In internal trade, we lack these types of control but in international trade, a country generally imposes several types of control through which "free trade" becomes difficult. Government generally introduces so many controls and policy measures in the forms of Exim Policy, Licencing policy, Tariff policy, Quota restrictions and other modes of exchange control and these controls and restrictions the exporting and importing parties have to follow but in internal trade, there are no such restrictions and controls. 20. Problems of Transportation - In internal trade, problems and risks related to means of transportation are less in comparison to international trade. In international trade, major trade is undertaken by sea and air transport and the risk and cost both are more in international trade. 21. Difference in Competition Level - In international trade, the level of competition is very high while due to existence of trade organisations, the competition is not of that magnitude in internal trade. There is less monopolistic attitude in international trade that gives more benefits to consumers in the form of cheaper and quality goods. 22. Different Specific Problems- In internal trade, we face some specific types of problems in the forms of foreign exchange control, international liquidity and other international monetary problems which are totally absent in case of internal trade. 23. Effect on Movement of Capital- There is little effect on movement of capital in internal trade while the international trade is highly dependent on the volume of foreign loan, investment and other forms of foreign capital. If there are restrictions on the movement of capital in that case there will be low volume of international trade and vice versa. SIGNIFICANCE OF INTERNATIONAL TRADE International trade has become the vital necessity for each country. There is no country in the world which could be regarded as a truly self-reliant economy. In today's world, each country irrespective of its development level is highly dependent on others. No country can survive in this mutually dependent world economy. They have to establish trade and economic relations with other countries. The international division of labour, specialisations, large-scale productions, high-tech information technology, developed transportation and communication means have made all scattered world markets into a single globalised international market. International trade has been growing faster than the world output. In the last two decades of the twentieth century, the international trade has grown twice as fast as world GDP (6% v/s 3%). The important role of international trade played in global economic integration is indicated by the increasing trade-GDP ratio. Thus, the international trade has become an important driver of globalisation. Study of international trade as a major area of research in economic studies has become very important now a days. Many economists consider it an important tool of economic growth and prosperity, Foreign trade has played vital role in the development of the economies of developed countries like U.K. U.S.A. and Japan. In the present context and structure of global

economies, no economy can exist without the development of foreign trade. There are many reasons of such vitality of international trade for all types of economies whether large or small, socialistic or capitalist, developed or developing. Some of the reasons can be enumerated as follows:

1. Inequality of Natural Resources - First and foremost reason which gave birth to the

inter-dependence of economies on eachother and ultimately the reliance on growing foreign trade is due to the scatteredness and centralization of various natural resources in the various regions of the world. In some parts of the world some resources are abundant and while in some parts they are very scarce or even not available, for example black gold i.e. petroleum is abundant in some parts of the world particularly in Gulf region while in other part it is not available and they have to resort to that region in order to meet their demand. Ironically the nature has created natural resources for the benefit of entire mankind and it is scattered at entire global level. The entire natural resources are made available by the merciful creator of the universe to meet the intrinsic and inherent needs of human beings at global level. All the requirements of human being and the availability of natural resources are fully balanced at global level but due to deviation from divine path the humanity itself disintegrated on the basis of region, country or nation etc and each country monopolised on the natural resources existing in that country and thus this unique balance between availability of natural resources and the requirements of humanity is networking and the economies ofthe world became the victim of imbalance due the this development, world economies are suffering from many imbalances though of different magnitude. These created imbalances in the field of natural resources each country has been compelled to take the help of international trade in order to overcome these imbalances to some extent. Now a days international trade has become the pivotal tool for the exchange of natural resources among different regions and countries ofthe world. the engine of growth and development. Many economists from Adam Smith to the present day, has established positive relationship between international trade and economic development. According to them foreign trade has been the key and positive factor in the economic growth of U.K., U.S.A., Japan .Australia, New Zealand, Canada, Sweden and Denmark etc. for making the foreign trade as an effective engine of growth, liberalised trade is essential as advocated by Haberler, Viner and G.M. Meier who presented a full and systematic treatment to the international trade economic growth relationship but there is a group of economists who don't accept such positive relationship for developing nations due to in-flexibilities and inelasticities in their economies to take advantage of international trade for their economic development. Nevertheless economists of this group such as Gunnar Myrdal, R. Prebisch, R. Nurkse and H. Singer etc. also agree that international trade is absolutely essential to under developed nations economic development. According to them international trade can be mad&an effective engine of development for the development of the developing economics only if certain "Protectionist measures" are adopted to offset harmful market forces. Thus international trade can be used as a vehicle of development for the developing nations like India by allowing it to function more freely and liberally though with some protective policy measurements in order to avoid the harmful effects of markets and minimize the inflexibility found in various sectors of the economy. international trade is the result of increasing geographical specialisation. Many countries have adopted techniques of division of labour and international specialisation due to technological developments. They produce only those goods in which they specialize and thus they produce more than their requirements at a low cost and gains the advantages of large scale production and their economies. They have maximum comparative cost advantage in exporting the surplus production to those countries who are not specialised in the production of those commodities at the level

2. For Economic Growth and Development - International trade has been regarded as

3. Large Scale Production: International Specialisation - Growing significance of the

of specialised countries. This international specialisation and geographical division of labour paved the ways for higher production at low cost and thus boosting the international trade.

4. Upgrading Standard of Living - This international specialisation and Geographical

division of labour has facilitated the production of varieties of goods and greater diversity of qualities of goods that become available for consumption in each country as a result of international trade. Thus in many ways the international trade has upgraded and diversified the standard of living of the mankind at global level and helped in increasing world prosperity and economic welfare of each trading country. easily solve its emergent and immediate problems of scarcity of food, drugs, textiles or other essential raw materials through imports.

5. Helpful in Solving Emergent Problems - Through international trade , a country can 6. Standardised and Qualitative Production - International trade encourage
competition at global level, due to this competition from foreign goods in the domestic market tends to induce domestic products more efficient and competitive to improve and maintain the quality of the products. Thus international trade is a responsible factor for standardised and qualitative production at global level. of harmonizing international political relations. Due to the increasing interdependence of the countries through international trade, the nations of world are compelled to recognize the mutual interests. Thus environment of mutual co-operation and pece at global level is growing faster. through international trade, cultural exchanges and ties among different countries develop. International trade has played a vital role in the development of culture and civilisation.

7. Harmonisation of International Relations - International trade has become the tool

8. Development of Culture and Civilisation - Growing interaction and cooperation

industrial activities of an economy. It enables to produce larger volume and variety of goods. This process ultimately increases production and productivity at large and the general well being and living standard of mankind is raised enormously. International trade has facilitated mass consumption the world over and thus, it further boosts the production and capital formation, the recessionary trends are checked and the economy continues to flourish. The role of international trade in the economic development is widely recognised and in international trade exports occupy paramount importance, country's foreign exchange requirements for building and strengthening the economy, can easily be met through exports earnings rather than sources like grants in aids, loans and private inflows. The advantages of international trade are as follows: 1. It provides material means in form of capital goods, machinery and other semifinished material which are indispensable for economic development. 2. It is an important source of technical knowledge , managerial talents and entrepreneurship. 3. It brings an atmosphere of healthy competition by checking monopolies and restrictive trade practices. 4. Trade create structural change in a countrys economic characteristics proportions and relationship.

9. International trade also promotes capital formation and external economies in the

THE NECESSITY OF INTERNATIONAL TRADE

1. ECONOMIC NEED The principal grounds of necessity of international trade are the economic reasons and they are many in numbers but important economic reasons could be elaborated as follows: a. To Fulfill the Fundamental Necessities of the Masses - If any country lacks the basic requirement of life like food grains, it can only be fulfilled through import of those necessities in order to save the lives of their citizens. b. To Import Necessary Technology - In order to upgrade the existing level of technology many countries import higher technology and machinery from other developed countries. c. For Accelerating the Pace of Economic Development- International trade has truly been regarded as the engine of growth and development and with the help of international trade, they can easily accelerate the pace of their economic development. d. To Take the Benefits of International Division of Labour and Specialisation - Each country can take the benefit by producing only those commodities in which they have comparatively an edge over other with less of cost of production. e. For Accumulating Foreign Exchange Reserve - Many countries desire to stimulate their trading capacity through creating more and more of foreign exchange reserve and higher level of export in this regard could solve the problem of the country. f. Theory of Opportunity Cost - This doctrine also clarifies the need of international trade. According to this theory, the less efficient production will be out resulting in the production and export of the highly efficient and competitive goods in the international market. g. To Create Infrastructure in the Economy - Many developing countries lack basic infra structure in their economies and in order to create them, they have to enter into international trade. h. To Take the Comparative Cost Advantage - international trade make all the
countries to take the benefits of comparative cost advantage. i. Difference in Development Level -All countries of the world do not have similar development level and international trade will minimise this difference. 2. GEOGRAPHICAL NEED a. Geographical Location and Natural Climate -All the countries of the world have different geographical location and natural climate and all types of goods can not be produced in one single country. Due to difference in geographical conditions different countries produce different types of commodities like production of wheat by Australia and Canada, Jute in Bangladesh and Dates in Arab. Etc. and due to this reason many countries specialise in production of certain specialised commodities only and they produce in abundant quantity and the surplus they export to other countries of world. b. Unequal Distribution of Natural Resources - Nature has not bestowed its resources equally. Due to this characteristics, they have unequal distribution of natural resources. For example, the Arabian Gulf Countries have abundant Petroleum and many developed countries like USA UK and France also depend on these countries for their oil requirement. c. Natural Calamities - Many countries from time to time suffer various kinds of natural disasters in the form of earthquake, flood, famine, droughts and epidemics. In order to overcome these natural calamities, the nations have to take the help of other nations. d. Difference in Human Resources -All countries also differ in their human

resources and their capacities. In some country, we have highly skilled Labour force. While in some they have poor qualities physically and intellectually they differ and they produce different types of goods and services and through international trade these differences can be minimised. 3. SOCIAL NEED a. Materialistic Attitude - In the present age of materialism, the people have become more materialistic with more and more wants and their increasing desires can only be fulfilled through international trade. b. Difference in Culture and Civilisation - All countries have different culture and these differences in culture also facilitated international trade. c. Desire for Different Tastes and Varied Consumption - People like to have different types of taste and variety in their consumption and they also want to consume the goods which are not produced indigenously. For this purpose in satisfying their desire international trade becomes the panacea for such people. 4. POLITICAL NEED a. Desire to Gain Political Power and Strength - Many countries, only to establish good political relations, they enter into international trade. b. To Cater Imperialistic Interest - In colonial rule many countries through international trade strengthen their imperialism. The best example is trade of UK with their allies in common wealth. c. For Political Stability - Many countries, for their polilical stability they indulge in international trade. It is generally argued that the countries having more international trade with more countries they have political stability and less transfer of powers. For example, The countries USA, Japan, Germany, France and UK have political stability due to more international trade while, the Africa^ cuntries like Uganda, Nigeria, Kenya have political instability because of less international trade. Thus for political stability also participation in trade is indispensable. ADVANTAGES / BENEFITS / GAINS OF INTERNATIONAL TRADE ECONOMIC ADVANTAGES 1. International Division of Labour and Specialisation - In international division of labour, a country only produces those commodities in which she specialises and has low cost. Due to geographical and climatic conditions, social and political environment, skills of the population international division of labour and specialisation has become inevitable. 2. Cheap Goods to Consumers - Through international trade, the consumer will get cheaper and better quality of goods because the country having a comparative cost benefit will produce the commodities at low cost and other countries instead of producing those commodities at higher cost will import at cheaper rate for their citizens. 3. Raising Living Standard - With availability of better and cheaper goods at international level consumers living standard will increase. They can utilise more goods with low income because of low price in the international market. 4. Utilisation of Natural Resources - With the help of international trade the countries of the world can fully utilizes their natural resources. Arabian Gulf Countries have abundant oil resources but they lack agricultural and industrial goods. Through utilising this natural resource oil they can easily procure their necessities; According to Bestable" there are many commodities which could not be produced in sufficient quantity or at a price low enough to induce consumer but which could easily be obtained by means of international exchange". 5. Economies of Large Scale Productions- In international trade the scope of the market is very wide and due to increase in demand at international level, the commodities are produced in abundant quantity with utilising the fullest capacity of

production and this generate huge economies of large scale production and gives benefits in various forms to the consumers at large. 6. Expansion of Technical Knowledge -At world level, due to tough competition and spirit of innovation, the level of technical know-how is increasing day by day. Many developing countries have become capable of utilizing high technology in their agriculture and industry. 7. Improvement in Production Methods- With the use of higher technology many countries have successfully replaced their traditional and out dated old technology of production. With the influence of the international trade many industries are paying more attention towards Research and Development (R&D). 8. Facilitating Price Equalisation - International trade has facilitated price stability at world level for many commodities traded globally. If any commodity's price rises, the supply from low price market will come and this will tend to equalise the prices. 9. Check on Monopolistic Tendencies - International trade successfully controls the monopolistic attitude and tendencies by opening up of the market at global level and all parties involved have to face tough competitions. 10. Helpful in Economic Crisis - Many countries get relief from their economic problem, and crisis successfully with the help of international trade. In case of low production, shortage of goods particularly foodgrains can easily be solved with the help of international trade. 11. Relief in Natural Calamities - Many times countries of the world face various types of natural calamities like flood famine, earth quake etc. In these precarious crisis, the countries could get rid off these natural calamities with theTtelp of international trade. 12. Availability of Raw Materials - With-the help of international trade the| countries get easily necessary raw materials from other countries for operation, of their industries. Proper and adequate supply of raw material helps in>, accelerating the pace of industrial development. 13. Enhanced Economic Cooperation - International trade has helped enormously in boosting international economic cooperation among various countries of the world and today world economy is transforming into a single globalised world economy. 14. Balanced industrial Development - With the help of international trade many countries have attained balanced industrial development in their economies because through international trade, their local industries can easily procure necessary raw material, machinery and other capital goods skilled manpower and higher technology. 15. Modrnisation of Industries - International trade has compelled all nations to produce better quality of goods with low cost and for this purpose they have to adopt latest technology for their industries. With more exchanges of technology many developing countries have successfully managed to modernise their many key and fundamental industries. 16. Increase in Employment Opportunities - International trade has generated huge, opportunites in the field of employment In order to cater enhanced demand the developing countries are establishing new ventures and industries in their economies and giving ample employment opportunities to their unemployed youth, 17. More Rate of Capital Formation - International trade helps in promoting trade activities, extending markets, accelerating industrialisation, boosting income, saving and investment and ultimately helps in increasing the rate of capital formation in the country. 18. Increasing the Rate of Economic Growth and Development- International trade is regarded as the engine of growth and development. Many countries have achieved new

heights in their economies with the help of international trade. increased tremendously. Developing countries like India mobilises huge revenue through imposition of various taxes and duties on different items of imports and exports. 20. Earning of Foreign Exchange-With the help of foreign exchange reserve, the countries could get any commodities and services and by boosting the export in international trade many countries have created huge foreign exchange reserve. They have good and positive effects on overall monetary system of the country also. 21. Availability of Specific Commodities - Through international trade, a country could get many specific commodities from any part of the world which are not produced in the country and the citisens have more attraction for those goods. In initial years, Indians started to use car, colour TV and many other electronic items by importing from other countries. Be stable has rightly remarked that'll is able to procure commodities which it is absolutely unable to produce". According to Walter Krause, "International trade permits more people to line to gratify more varied tastes and to enjoy a higher standard of living than would be possible in its absence." 22. Conservation of Scarce Resources - International trade enables a country to conserve certain scarce resources as commodities which embody these scarce resources may be imported from countries where they are abundant. These scarce resources could be preserved for future generation. 23. Encouraging Efficient Source of Supply - International trade encourages the development of the most efficient sources of supply. International trade' makes available to the people of a country a galaxy of goods and services at the most competitive prices. 24. Qualitative Change in Labour and Capital - International trade drastically transforms the labour and capital and their skills and capabilities. International trade is the means and vehicle for the dissemination of technical knowledge, the transmission of ideas for the importation of know-how, skills, managerial talents and entrepreneurship. 25. Movement of Capital - Internationa! trade is also the vehicle for international movement of capital, especially from the developed to the underdeveloped countries. It may be noted that India's trade liberalisation has brought in very significant benefits for the consumers and the nation as a whole. The tremendous expansion of international trade itself is the best proof that nations gain from trade among themselves. NON-ECONOMIC ADVANTAGES 1. Enhanced Cultural Relations - International trade helps in promoting cultural relations also among different cultural entities of the world. Peoples comes together, interact with each other, develop social relations and through these enhanced cultural relations a good atmosphere of international cooperation is created. According to Horn and Gomez" International trade is the great civilising agency". 2. Encouragement to International Cooperation - International trade increases the interaction among people of different nations which ultimately encourages international cooperation. This enhanced economic cooperation pave the way for better political relations. According to Charles P. Kindleberger" In the world of rising nationalism or rising internationalism or both, international economics is an important tool of understanding and negotiations. 3. Dependence on Foreign Countries - Due to international trade many developing countries have become highly depended of developed countries in various fields and this situation creates so many economic and other problems to these countries. 4. Exhausation of Natural Resources -To earn timely gains, many countries fastly exhaust their scarce natural resources and in turn, they face huge and innumerable losses in long term because of the lack of those resources. This is specially in case of less developed countries whose exports are mostly natural resources.

19. Increase in Government Revenue-Through international trade, government revenue has

5. One Sided Development of the Country- One Country only produces those commodities

in which it specialises due to geographic division of Labour and specialisation. Thus they lack in all other fields. So the country's economic development remains one sided instead of overall balanced development. 6. Dumping - In international trade many in order to capture the market in future, they dispose off their products far below the cost. This tendency in world trade is called dumping and it has several adverse effects to the developing economies. 7. Disadvantages to Agricultural Economies - Due to low price of agricultural products and early application of laws of return in comparision to high-tech and high value industrial products of the advanced countries. Agricultural economics always face huge losses. 8. Economic Exploitation - Due to poor bargaining power of the poor and developing countries of the world. Developed countries economically exploit them and compell them to accept highly adverse terms of trade. 9. Adverse Effects on the Habits of the Consumers - International trade inculcate many times bad habits of consumption. Due to availability of undesirable goods also with the help of international trade the people become addict of many bad things like drugs, heroine, opium and others. 10. Lower Standard of Living - Many times, in international trade developing countries export the necessaries and in domestic market, the supply of those goods decrease and prices rise and this situation also prevails when there is less import of necessary goods. In all these cases the standard of living of that country will ultimately fall. 11. International Jealousy - When we see that international trade has helped in boosting international cooperation and harmony, it is also true that many time