Measuring the effectivity of international trade
International trade is based on the process of importing and exporting goods. Every good exported by one country must be imported by another. International trade increases total output. Nations trade with one another because they expect to benefit from the transaction. Trade enables them to exchange things they don’t need for the things they do need.
The result of trade process is shown in the countries trade balance. The trade balance is the difference between exports and imports. On a global economy imports must equal exports. If the value of imports exceeds the value of exports then trade balance is deficit. If a nation’s exports exceed its imports, the nation has a favourable balance of trade, or a trade surplus.
International trade makes a few effects on the economy. Sometimes imports mean fewer jobs and less income for some domestic industries. Exports represent increased jobs and incomes for other industries. That is why government must use trade restrictions.