What is foreign trade?

Foreign economic activity is foreign economic activity, a key component of the international market. Let's talk in more detail about what foreign trade activities are, and also consider the directions of foreign economic activity.

What is FEA: the meaning and essence of the concept

Definition of term

Foreign economic activity (abbreviated as FEA) is one of the varieties of economic activity, a feature of which is the complete orientation of the organizational, financial, production, and economic components to the external market.

In more simple words, explaining what foreign trade activities are, it can be said that this is an exchange of services, goods or information between subjects, objects of trade on the international market.

Directions of foreign trade activities

  • Foreign trade activity is a system of commodity-money relations arising between participants in international trade. The latter has a number of advantages, including: the development of mass production; stimulation of the improvement of technology (including production); growth of production and competition, encouraging improvement; the accumulation of capital, contributing to industrial, industrial development and so on.
  • The international division of labor (MRT) - that is, the specialization of the countries of the world market in the production of certain goods, the provision of services, the performance of some work. This is usually due to the presence in each country of optimal conditions (for example, climate, financial); resources (cheap labor, availability of materials for the manufacture of something, etc.) for a particular production. MRI allows individual states to not only meet their needs by producing certain material goods, but also to get good income by exporting production results to other countries.
  • Production cooperation. Consolidation of several participants of the world market for the production of goods / services, execution of works, supply of information. In addition, each country invests in the production of its available resources. The results of this activity are also used to meet domestic demand, as well as for the union of export sales that is beneficial for all participants.
  • Financial and credit and currency transactions. This direction of foreign economic activity includes a wide list of relationships.This includes international money transfers, and lending, questions regarding the import and export of valuables, currency exchange, investment, and so on.

Forms of foreign trade activities

Based on the directions of foreign economic activity, the following forms of foreign economic relations can be distinguished:

  • Trade. It includes the exchange of products for both industrial and public consumption, as well as the purchase and sale of intellectual property (engineering, licenses, etc.).
  • Provision of services. On the international market they are provided by such subjects of foreign trade activities: banks, insurance companies, travel companies, logistics organizations and so on.
  • Co-production, mutually beneficial cooperation. They affect absolutely all spheres of human activity: medicine, science, culture (for example, co-production of films), heavy and light industry, agriculture, and so on.

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