Chapter – 8

International Trade

In this post we have given the detailed notes of class 12 Geography Book 1 Chapter 8 (International Trade) in English. These notes are useful for the students who are going to appear in class 12 board exams.

Printed Books Are Available Now!

Chapter 8: International Trade

Introduction

• Trade: The voluntary exchange of goods and services between two parties, one selling and the other purchasing.  
• International Trade: The exchange of goods and services across national boundaries.  
• Purpose: To obtain commodities that countries cannot produce themselves or can purchase at a lower price elsewhere.  

Barter System

• Definition: The initial form of trade in primitive societies, involving the direct exchange of goods.  
• Example: A potter exchanging pots for a plumber’s services.  
• Difficulties: Overcoming the challenges of finding someone who needs what you have and vice versa.  
• Solution: The introduction of money.  
• Early Forms of Money: Rare objects with high intrinsic value, such as flintstones, obsidian, cowrie shells, tiger paws, whale teeth, dog teeth, skins, furs, cattle, rice, peppercorns, salt, small tools, copper, silver, and gold.  

History of International Trade

• Ancient Times: Trade was restricted to local markets due to the risks of transporting goods over long distances.  
• Early Trade: Primarily focused on basic necessities like food and clothes, with luxury items like jewellery and costly dresses traded among the wealthy.  
• The Silk Route: An early example of long-distance trade connecting Rome to China, facilitating the exchange of Chinese silk, Roman wool, precious metals, and other high-value commodities from intermediate points in India, Persia, and Central Asia.  
• 12th and 13th Centuries: European commerce expanded with the development of ocean-going warships, leading to increased trade between Europe and Asia and the discovery of the Americas.  
• 15th Century Onwards: European colonialism began, resulting in the trade of exotic commodities and the emergence of the slave trade.  
• Slave Trade: The Portuguese, Dutch, Spaniards, and British captured African natives and transported them to the Americas for labor in the plantations.  
• Abolition of Slave Trade: Abolished in Denmark in 1792, Great Britain in 1807, and the United States in 1808.  
• Industrial Revolution: Increased demand for raw materials like grains, meat, and wool, but their value declined compared to manufactured goods.  
• Trade Pattern: Industrialized nations imported primary products as raw materials and exported value-added finished products back to non-industrialized nations.  
• Late 19th Century: Industrial nations became each other’s primary customers.  
• World Wars I and II: Countries imposed trade taxes and restrictions for the first time.  
• Post-War Period: Organizations like GATT (later WTO) helped reduce tariffs.  

Basis of International Trade

• Specialization: International trade exists due to specialization in production, benefiting the world economy when different countries specialize and divide labor.  
• Principles: International trade is based on comparative advantage, complementarity, and transferability of goods and services.  

Factors Influencing International Trade

• Differences in National Resources: The uneven distribution of resources due to variations in geology, relief, soil, and climate.  
• Population Factors: The size, distribution, and diversity of people between countries impact the type and volume of goods traded.  
• Stage of Economic Development: The nature of items traded changes with different stages of economic development.  
• Extent of Foreign Investment: Foreign investment can boost trade in developing countries lacking capital for industrial development.  
• Transport: Efficient transportation systems have enabled the spatial expansion of trade.  

Balance of Trade

• Definition: The record of the volume of goods and services imported and exported by a country.  
• Negative Balance: When imports exceed exports, leading to an unfavorable balance of trade.  
• Positive Balance: When exports exceed imports, resulting in a favorable balance of trade.  
• Implications: The balance of trade and balance of payments significantly impact a country’s economy, with a negative balance potentially leading to the exhaustion of financial reserves.  

Types of International Trade

• Bilateral Trade: Two countries trade specified commodities with each other under an agreement.  
• Multilateral Trade: A country trades with multiple other countries, potentially granting “Most Favored Nation” (MFN) status to some trading partners.  

Free Trade

• Definition: Opening economies for trading by reducing trade barriers like tariffs, also known as trade liberalization.  
• Benefits: Allows goods and services from everywhere to compete with domestic products and services.  
• Concerns: Globalization and free trade can negatively affect developing economies by imposing unfavorable conditions.  

Dumping

• Definition: The practice of selling a commodity in two countries at different prices for reasons unrelated to costs.  
• Concerns: Dumping has become a serious issue among trading nations.  

World Trade Organization (WTO)

• Formation: Established on January 1, 1995, as a permanent institution for promoting free and fair trade among nations, replacing GATT (formed in 1948).  
• Functions: Sets rules for the global trading system, resolves disputes between member nations, and covers trade in services and intellectual property rights.  
• Criticisms: Concerns about the effects of free trade and economic globalization, including widening the gap between rich and poor countries and ignoring issues of health, worker’s rights, child labor, and the environment.  

Regional Trade Blocs

• Purpose: To encourage trade between geographically close countries with similar and complementary trading items, reducing restrictions on trade for developing countries.  
• Benefits: Remove trade tariffs within member nations and encourage free trade.  

Concerns Related to International Trade

• Benefits: Can lead to regional specialization, higher production levels, a better standard of living, and the availability of goods and services worldwide.  
• Detriments: Can cause dependence on other countries, uneven development, exploitation, and commercial rivalry.  
• Environmental Impact: Increased production and use of natural resources can lead to resource depletion, deforestation, and marine life depletion.  

Gateways of International Trade: Ports

• Importance: Ports are essential gateways for international trade, facilitating the movement of cargo and travelers.  
• Functions: Provide docking, loading, unloading, and storage facilities for cargo, as well as maintaining navigable channels and arranging support services.  

Types of Ports

• Based on Traffic:
  • Industrial Ports: Specialize in bulk cargo like grain, sugar, ore, oil, and chemicals.  
  • Commercial Ports: Handle general cargo, packaged products, manufactured goods, and passenger traffic.  
  • Comprehensive Ports: Handle both bulk and general cargo in large volumes.  
• Based on Location:
  • Inland Ports: Located away from the sea coast and linked to it through a river or canal.  
  • Out Ports: Deepwater ports built away from actual ports to receive large ships that cannot approach the parent port.  
• Based on Specialized Functions:
  • Oil Ports: Deal with the processing and shipping of oil.  
  • Ports of Call: Originally developed as calling points on main sea routes for refueling and restocking, later becoming commercial ports.  
  • Packet Stations: Also known as ferry ports, they transport passengers and mail across short distances.  
  • Entrepot Ports: Collection centers where goods from different countries are brought for export.  
  • Naval Ports: Serve warships and have repair workshops for them.  

We hope that class 12 Geography Book 1 Chapter 8 International Trade notes in English helped you. If you have any query about class 12 Geography Book 1 Chapter 8 International Trade notes in English or about any other notes of class 12 Geography Book 1 in English, so you can comment below. We will reach you as soon as possible…