The exchange of goods and their sale and purchase is called trade. Trade is of three types:

(i) Local, (ii) Regional, (iii) International.

When a country exchanges its goods/commodities/products with another country, it is called oversea trade, or foreign trade or international trade. The richness of international trade is considered as an index of a country’s economic strength in this

The difference between the value of exports and value of imports is known as balance of trade. If the imports of a country exceed its exports, the balance of trade is negative or unfavorable and vice versa.


Trade among countries has been carried on since long. In the old days, man bartered a few products with his neighbour. But as time passed, information and knowledge of man about other countries increased, science and technology developed, relations with other countries established and means of transportation were developed, and international trade became a common and popular feature in the world.

From a petty local trade and barter system, there has emerged a very well organized and a complex system of international trade involving ships, aircraft, railways, trucks etc. for the transportation of different kinds of materials from one part of the world to another.

There exists a complicated and extensive network of shipping companies, insurance companies, banks and other financial institutions and legal consultancy services etc. those help in promoting international trade.

Development of science and technology, manufacturing of ships, and boats, railways and automobiles, development of mining, forests, fishing and agricultural activities, cordial world relationships among the countries are some of the important factors which have boosted trade etc.


An increase in world population, foreign development of quick and efficient means of transportation, introduction of refrigeration in the ships and rail wagons, diversification of economic production have further given a fillip to foreign trade in the world.