Introduction, importance and reasons for International Trade

• Trade is the buying and selling of goods and services in order to satisfy the needs and wants of consumers.
• Trade between two countries is known as bilateral trade.
• Trade between more than two countries is known as multilateral trade.
• Both bilateral and multilateral trade are classified as international trade.

Why Zimbabwe Trades with other countries?

• Zimbabwe does not have all it requires to feed its populace i.e. like most countries it is not self-sufficient.
• It therefore buys goods and services from other countries in order to:
• Get what it does not have due to climatic conditions for example raw materials such as cocoa.
• Get what it cannot manufacture due to lack of technological expertise or differences in technology for example vehicles.
• Access a wider rang of goods and services thus uplifting the standards of living.
• Prevent shortages for example when there is a drought.
• Obtain higher quality goods at lower prices than would otherwise be possible if they were manufactured locally.
• Benefit from comparative cost advantage.
• Get seasonal goods when they are not in season in Zimbabwe.

Zimbabwe also sells goods and services to other countries in order to:

• Increase sales by widening its market thus creating employment for its people within and outside its borders.
• Allow specialisation in the production of goods.
• Get rid of excess goods it produces.
• Obtain foreign currency which is required to pay for the import of goods and services.
• Keep its local industries busy producing goods and thus also creating employment.
• Force local industries to produce goods of high quality because international markets are competitive.
• Foster peace and friendship with other countries.
• Promote cultural, scientific and economic cooperation with other countries e.g. China.
• Benefit technology by trading with more developed countries.

To access more topics go to the Commerce Notes page.