The role of foreign trade and its effects

Abstract

Foreign trade is the reflection of economic relationships among the individual economies and represents the part of the country foreign relationships, which include trade exchange of a part of the production. In the simplifies balance understanding, it is usually presupposed that the object of this exchange is such a part of the production, which exceeds the home consumers demand and thus is the object of export, or, vice versa, that part of the home demand which is not satisfied by the home production and thus has to be covered by import. In reality, the whole process is, however, substantially more complicated, as the whole series of reasons (price, trade, political etc.) lead often to exporting even those products which might have been realised in the home market, regarding the purchasable demand, and on the other hand, import includes in most commodity groups also the products competing with the home production and thus securing a wider assortment of supply.

Keywords

• function of foreign trade
• transformation function
• factor of economic growth
• factor of the home economy lagging behind
• measure and shape of the economy openness
• evaluation of the foreign trade effects