Q. 17

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Answer :

Specialization in production and division of labour gives rise to international trade. This trade is also based on the principle of comparative advantage that is mutually beneficial to trading partners.


In ancient times, owing to security concerns, international trade was risky and restricted trade to local markets.


The Silk Route covering almost 6000 kms, connecting Rome and China is one of the earliest examples that contributed to the development of international trade. This was a land-based route and objects like Chinese silk, Roman wool and precious metals and many other high value commodities from intermediate points in India, Persia and Central Asia were traded.


The success of such trading and the discovery of sea and ocean routes led to the flourishing of international trade.


The growth of European commerce and the subsequent development of navigation in 12th and 13th century led to further development of international trade between Europe and Asia.


The 15th century saw the emergence of slave trade which led to trade relations between the Portuguese, Dutch, Spaniards, English and the Americas where the Europeans sold the African slaves.


Following industrial revolution, there was a marked shift in the commodities involved in international trade. Raw materials were now imported by the industrialized nations at cheaper rates. But the value-added finished products were exported back to the non-industrialised nations.


Following the two World Wars, trade relations became more structured and international organisations like World Trade Organization (WTO) were developed to further impact international trade and make it a beneficial venture.


OR


Specialization in production and division of labour gives rise to international trade. This trade is also based on the principle of comparative advantage that is mutually beneficial to trading partners. It has become the basis of not only the world’s economy, but also one of the important factors influencing any country’s foreign policy. Though differences in the availability of resources play an important role in the basis of international trade, population factor also acts as a primary basis.


The type and volume of goods traded in through international trade is affected by the size, distribution and diversity of people between countries. This influence of population factor can be studied under the following categories -


a) Cultural factors – different cultures and their related practices produce distinct art and craft materials which are coveted in the international markets. For e.g. China produces the finest porcelains and brocades while the carpets of Iran are famous. Similarly, North African leather work and Indonesian batik cloth are prized handicrafts. These handicrafts become valued materials for international trade.


b) Size of population: high volume of internal trade is observed in densely populated countries. Local markets in such countries utilize most of the agricultural and industrial products, which in turn reduces the bulk of materials available for international trade. Thus, size of population has an inverse relation with the amount of international trade practiced in a country.


c) Standard of living – Populations which have a higher standard of living are able to pay for costly imported goods while the opposite is true for countries with lower standards of living.


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