Why Trade is important for countries and how to improve it

Why Trade is important for countries and how to improve it

In modern times, it is observed that only those countries have a strong and stable economic system that can cope up with the global competition. The role of strengthening the economy of a country majorly lies in its performance on trade. Trade happens to be a long-lasting process that sustains the economic and social prosperity of a country.

Hence it becomes utmost important for a country to improve its trade

Trade is seen as the engine of world growth. Much of the rapid growth of the world economy in the last fifty years is due to increase trade. When a country trades, it brings in businesses that generate other economic activities leading to industrialization. There are multiple examples of countries that have developed their economy due to trade. For instance China and Singapore which started off as poor countries but within decades improved themselves into strong economic states.

Trade serves as a factor of capital formation within a country. It has been seen that underdeveloped countries usually have a low rate of investment. This is mainly because they are low in saving rate. By trade, such countries can bring the capital which will enable them to save more and ultimately invest more. Trade creates a balance between saving and investment and steer the country on a way towards prosperity.

Trade helps in industrialization. Every country in the modern world strives for industrial revolution and enhancement. The only way for a country to have a seat at the table of the global economy is to create more industries, expand businesses, and increase the production. The capital generated by trade stimulates the growth of industries. This expansion and growth of industries promote production levels. Thus, trade serves as a backbone for all the economic promotions.

 

Trade is one big factor that helps to reduce the disparities among the countries i-e when one country has an abundance of commodities, it exports them to other countries that need them and gets capital in return. Similarly, it imports goods in the same condition. Thus it creates a cycle of fulfilling the needs of the countries and helps people enjoy something that their country is scarce. An example of the oil-rich Middle East countries can make it crystal clear that they hold high importance in the global economy due to the fact of being oil providers. Trade is the key to maintain the level of demand and supply among the countries.

Trade removes the element of unemployment prevailing in the country. It generates economic activities, promotes businesses and industrialization which helps people get employment. The income generated by employment makes the people of the country to work even harder, increases their efficiency, and overall improve their standard of living. The social and economic stability leads the country towards success.

Trade can serve as a strong bond between the countries. A country can maintain healthy foreign relationships through import and export by fulfilling the parameters of demand and supply. There is an example of a healthy relationship between China and Pakistan.

A country needs to improve its trade. This can be done by stimulating the export by concentrating on its export goods. Enhanced quality of products satisfying the standard of consumer will increase its demand and builds up strong trade ties among the countries.

One other way to promote trade within a country is to increase its market access. A country needs to capture the market share by improving import and export in those markets which are untouched. Goods supplied up to the requirement of the new market will lead to have a platform of strong future trade. Especially for underdeveloped countries, it is very beneficial to expand their market and build trade ties with big economic powers.

A country can also improve transitional trade i-e to serve as a channel and accommodate the trade between two countries. The country provides a safe route for import and export and gets its own share. For this purpose a state has to concentrate on its security and peace level so that the other countries do not feel threatened and ready to join hands for a bright trade relation.

Innovation in technology and advanced procedures are facilitating in every field of life including trade. The world has become a global village and it is no more difficult to invade and win a new market on the other side of the globe. Effective use of the internet, E-commerce together with creative ideas can give a boost to the trade of a country.

In a nutshell, trade is the factor that makes a country gets stable with its economic, social, and political conditions. It makes a country uphold its sovereignty and let it have a position in the globe of the world.