Today we are living in a globalized world where it is possible to get any product virtually from anywhere in the world because of increased connectivity, communications and willingness to trade with other countries. Countries want to trade with each other because of the want of higher quality goods and services. Imports are those that a country seeks from others and exports are those which are sold to other countries.
It is not uncommon to wonder at how a foreign country acquires the currency of another country to buy its products. It is possible to buy the currency required in the international market of foreign exchange with its own currency based on the exchange rate. When a country produces more goods and services to export then more countries are in want of its currency to buy its goods and therefore its currency appreciates over that of others.
Trade is very important for the welfare of many nations because of the scarcity of resources to produce essential goods and services and also some countries may have excess resources but no market where the economy of that country depends on others to buy its goods. International trade also allows investors from other countries to set up factories in poor countries which are cash stripped and in need of employment.
The economics of trade indicates that everyone is better off doing trade rather than not doing trade. Suppose your school has Basket Ball and Foot ball teams where you have a choice to go for one or two of the teams. It would obviously be beneficial to choose the game which you can play efficiently and concentrate on that game rather than play both of them without good effort. It is best to leave the other game to the ones who are efficient to play that game and it makes the school effort better off than the previous choice of doing both yourselves. Take you and your friend as countries, your school as the world and the games as goods to be produced then you will have gotten an idea of importance and need of international trade.
