Definition of Foreign Trade

Definition of Foreign Trade

Foreign trade is the combined form of commercial transactions between two or more countries in the form of sales, investments, and transportation. Transactions can be off; private transactions or governmental transactions. Foreign trade or international trade is the cross-border transaction in the form of the flow of goods and services, flow of investment, and flow of regular trading. The participants of international business are the citizen of one country and the citizen of another country, the government of one country and citizens of another country. For example- If Bangladesh government imports rice from Thailand and export coal or gas to Thailand. Then it would be the foreign trade between the two countries. Some definitions of foreign trade are given below:

Prof. J.L. Hanson, “An exchange of various specialized commodities and services rendered among the corresponding countries is known as international trade.”

Prof. C.P. Kindleberzer, “International trade is the transaction of goods and services between two or more sovereign countries.”

John D. Daniels, “International business is all commercial transactions of private and governmental; sales, investments, and transportation that take place between two or more countries.”

From the above definitions some remarkable characteristics can be found out:

  • International trade occurs among the related countries.
  • Export and import procedures are involved in the foreign trade.
  • Prices of the products or services must be exchanged with the foreign currencies.

So, at last, we can say that foreign trade is all commercial transactions between two or more countries. The goal of private business is to make profit and government business may or may not be motivated by profit. Historically, international business activity first took the basic form of exporting and importing. However, in today’s complex world of international commerce, numerous other forms of international business activities are also common.