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Visible and invisible trade

Foreign trade is the exchange of goods between nations. We have 2 kinds of foreign trade. In addition to visible trade,which involves the import and export of goods and merchandice,there is invisible trade,which involves the exchange of services between nations.

Sm nations possess little in the way of exportable commodities or manufactured goods, but they have mild and sunny climate. During the winter the Bahamas attract large numbers of tourists, particularly from northeastern United States, who spend money for hotel accommodation, meals, taxis, and so on. Tourism, therefore, is another form of invisible trade.

In the past twenty-five years, tremendous demand has grown for the construction of large-scale development projects around the world, including dams, highway networks, and so on. The technical skills to build these projects are purchased when nation hires engineers and construction supervisors, usually from another country. The commissions and salaries that are paid to these people represent another form of invisible trade.

The United States has been described as nation of immigrants. Many Americans send money back to families and relatives in the "old country". In the past fifteen years, millions of workers from the countries of southern Europe have gone to work in Germany, Switzerland, France, the Benelux nations, and Scandinavia. The workers send money home to support their families. These are called immigrant remittances.They are an extremely important kind of invisible trade for some countries, both as imports and exports.

Invisible trade can be as important to some nations as the export of raw materials or commodities is for the others. In both cases, the nations earn money to buy necessities.

4. Nation's Balance f Payments

The different kinds of trade that nations engage in are varied and complex, mixture of visible and invisible trade. Most nations are more dependent on exports than on any other activity. The earnings from exports pay for the imports that they need and want. A nation's balance of payments is record of these complex transactions.

The two most important categories in any nation's balance of payments are its visible and invisible trade. third important category is investments.

Investments are the means by which nations utilize the capital to build factories and develop mines for their own industrial base.

Investments can have crucial impact on nation's balance of payments. When an investment is made, capital enters country enabling it import manufactured materials to build new manufacturing plant and to workers to build it. In this way, investments actsas catalystin economic growth for the developing countries throughout the world.

After calculating all of the entries in its balance of payments, nation has either net inflow or net outflow f money.

The most direct means of correcting deficit in the balance of payments and having an immediate impact is by reducing imports. This can be accomplished by imposing tariffs (taxes), quotas (import restrictions),or both. If successful, the cost of imports rises in the local market, and the imported goods are comparatively more expensive to the consumer than locally made goods. When quota is imposed, the quantity previously imported and paid for is reduced.

5.Documents needed in international trade and the mining of incoterms. International bank services

Gold, and to lesser extent silver, have been the traditional reserves. At one time, gold moved freely from country to country, but successive constraints have been imposedin the past fifty years. Today, gold counts as only one form among many in the reserves of country. number of countries have an agreement with the Federal Reserve Bank of New York to hold their gold in safe keeping. This makes it possible for these countries to buy gold from or to sell gold to other countries by merely moving the gold from one custodian vault to another at the Federal Reserve Bank of New York.

Countries may value their gold reserves at or near the current free market price. Generally, the gold that nations hold as reserves is separate from the gold that is traded in free market. Today, United States citizens can legally own gold, although very few think it worth the time or trouble. In other countries, such as France and India, there exists strong tradition of gold ownership.

Because all these international activities are conducted by companies nd individuals, need for international banking services has developed.

Date: 2015-12-11; view: 359

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