ECONOMICAL RELATIONS AND ITS TYPES

Аннотация

In a nation’s economy, the households, firms, and governments work together to fulfill the needs of individuals. However, human needs are diverse and continually increasing, and the national economy is typically unable to satisfy these needs, especially if satisfying these needs requires resources that are not abundant in the country. For instance, many countries do not have resources within themselves to obtain petroleum, and countries in colder climates lack the ability to grow tropical fruits, like bananas. This lack of available resources within a country poses an economic problem, which motivates individuals from different countries to establish trades. KEYWORDS: Development, economy, commerce, culture INTRODUCTION specifically, GDP and GNI. Hence, statistics of international trade are used to determine the International trade refers to transactions of overall health of the national economy. In goods or services between countries. newspapers, we can read reports on trade Countries with abundant resources can sell surplus or deficits in different years as well as them to other countries in exchange for editorials expressing concerns for these monetary compensation, just like we would numbers. conduct transactions in marketplaces. We recall that net exports, which refers to the International trade is not limited to difference between exports and imports, is a governments and large firms, although they component of national income, more are responsible for a bulk of transactions in “ECONOMICAL RELATIONS AND ITS TYPES” P age 6 | 4 international trade. Economists consider bonds, international investments include transactions between individuals or firms in purchasing fixed capital (such as factory different countries to be trades between the machinery) from abroad, buying foreign real economies of these countries rather than estate, and playing a major role in trades between individuals. No matter how entrepreneurship abroad. We will discuss this small a transaction is, goods and services category in greater detail later in this produced in one country’s economy enter a explainer. foreign economy, and money flows into the Let us consider a few other ways capital moves country’s economy in exchange. Residents or across borders. International economic aid firms from different countries can establish from developed countries or international trades in goods and services. Especially, thanks organizations also involves large sums of to the Internet, individuals can buy goods capital moving across borders and hence directly from foreign merchants and goods are should be considered under international delivered to the buyer’s doorstep. Also, in economic relations. Immigrants relocating to a tourism, residents travel to different countries country bring their wealth into the country’s and purchase foreign goods and services. economy and hence move it across borders. Hence, tourism also falls under the category of Workers in an economy may send money to international trade. In the previous example, families living abroad, which also moves we noted that economic activities, such as capital across borders. These, and many more investment in the stock market, are not a part examples where money moves across borders, of international trade. However, investing in a constitute international economic relations. foreign stock market does involve the movement of capital across borders, so such As we have discussed above, international monetary movements should be considered economic relations encompass a wide range of together with international trades. The economic activities between countries. We broader term used in this sense is can note the characteristics of international international economic relations; these economic relations as follows: involve the different types of economic and • Existence of political borders is an financial interactions/inter-linkages across apparent and essential characteristic of countries. International trade is an important international economic relations, which part of international economic relations, and it distinguishes them from other is perhaps best understood by the public domestic economic activities. Any because of its inclusion in the national income. monetary movement across borders is There are many components other than considered to be a component of international trade that are included in international economic relations. international economic relations. • Difference in currencies is also a International investment, such as the one characteristic of international mentioned in the previous example, is a major economic relations, although it is component of international economic possible for some countries to share the relations, which is often comparable in size of same currencies. When currencies of transactions to international trade. Here, two countries differ, money moving investment covers more than trades of across borders needs to be converted securities in foreign