THE IMPORTANCE OF INTERNATIONAL TRADE IN THE WORLD

In the modern world, there is mutual interdependence of the various national economies.Today it is hard to find the example of a closed economy. All economies of the world have become open. But the degree of openness varies from one country to another. Thus, in the modern world no country is completely self-sufficient. Self-sufficiency, in the sense used here, means the proportion of the goods and services consumed to their total output produced with in a country. But the degree of self-sufficiency varies from one country to another.

Equally important are the roles of the regional and international specialization.Regional specialization means that various regions or areas in a country specialize themselves in the production of different products. International specialization means that different countries of the world specialize in producing different goods. Factors which determine regional specialization are more or less the same as those which determine international specialization. A country which produces surplus of a good, i.e produces more than its requirements, will export it to other countries in exchange for the surplus produces of those countries.