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International Trade NCERT Chapter Notes CBSE Class 12 Geography Humanitas

CBSE Class 12 Geography NCERT Chapter Notes for International Trade Humanitas
16 April 2025 by
Akash Kumar

International Trade NCERT Chapter Notes CBSE Class 12 Geography Humanitas

CBSE Class 12 Geography NCERT Chapter Notes for International Trade


International trade is the exchange of goods, services, and capital across borders, promoting economic growth, specialization, and global interdependence. It enhances market efficiency, boosts innovation, and allows countries to access resources unavailable domestically. However, it also involves trade barriers, tariffs, and economic disparities among nations.

Trade 

The buying or selling of goods or services between people or countries. 

International Trade 

International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services.

Development of International Trade 

  1. In ancient times, transporting goods over long distances was risky, hence trade was restricted to local markets. 
  2. Earlier people spent most of their resources on the basis of necessities food and clothes 
  3. Only the rich people bought jewellery, costly dresses and this resulted in trade of luxury items.
  4. Fifteenth century onwards, the European colonization began along with trade of exotic commodities (a new form of trade emerged which was called slave trade). 
  5. After the Industrial Revolution, the industrialised nation imported primary products as raw material and exported the value added finished products to the non-industrialized nations. 
  6. In the latter half of the nineteenth century, the industrial nations became each other’s principle customers. 
  7. Post World War II, organizations like GATT (WTO) was formed to reduce tariffs to regulate International Trade.

Why International Trade Exists: 

International trade exists because:  

  1. International trade is the result of specialization in production.  
  2. Different countries practise specialization and division of labour in the production of commodities or provision of services. 
  3. Each kind of specialization can give rise to trade.

Basis of International Trade 

  1. Difference in national resources: the world’s national resources are unevenly distributed because of difference in their physical make up i.e. geology, relief soil, and climate. 
  2. Geological resources – It determines the mineral resource base and topographical differences ensures diversity of various crops and animals raised. 
  3. Mineral resources – Minerals are unevenly distributed on Earth and it’s the basis for any industrial development. 
  4. Climate – Climate influences the flora and fauna found in a certain place. Also, it ensures diversity in the range of various products.
  5. Population factors: The size distribution and diversity of people between countries affect the type and volume of good traded.
  6. Cultural factors: Distinctive forms of art and craft development, certain cultures which are valued the world over. 
  7. Size of population: Densely populated countries focus on internal trade as most production is consumed locally. External trade remains limited, and demand for imported goods depends on the standard of living, with low-income populations affording fewer costly imports. 
  8. Stage of economic development: The nature of trade changes with a country's economic development. Agricultural nations trade agro products for manufactured goods, while industrialized countries export machinery and finished products, importing food grains and raw materials. 
  9. Extent of foreign investment: Foreign investment boosts trade in developing countries by providing capital for industries like mining, oil drilling, and agriculture. This development benefits industrial nations by ensuring imports of raw materials and food while creating markets for their finished products, increasing global trade volume. 
  10. Transport: In the past, limited transport restricted trade to local areas, with only high-value items traded over long distances. Improved transport, refrigeration, and preservation have enabled the spatial expansion of trade. 

Balance of trade

  1. Balance of trade records the volume of good and services imported as well as exported by a country to other countries. 
  2. If the value of imports is more than the value of a country’s exports, the country has a negative or unfavourable balance of trade. 
  3. If the value of export is more than the value of imports then the country has a positive or favourable balance of trade.

Types of international trade in the world

  1. Bilateral trade: Bilateral trade is done between two countries. They enter into agreement to trade specified commodities amongst them. For example: country A may agree to trade some raw material with agreement to purchase some specified item to country or vice versa. 
  2. Multi-lateral trade: As the term suggests multi-lateral trade is conducted with many trading countries. The same country can trade with a number of other countries. The country may also grant the status of the Most Favoured Nation (MFN) on some of the trading partners.

Free trade

  1. The Act of opening up economies for trading is known as free trade or trade liberalisation.
  2. This is done by bringing down trade barriers like tariffs.
  3. Free trade should not let the rich countries enter the markets, but allow the developed countries to keep their own market protected from foreign products. 
  4. Country should also be cautious about dumped goods; The practice of selling a commodity in two countries at a price that differs for reasons not related to costs is called dumping. 

World trade organisation (WTO) 

  1. In 1948, to liberalise the world from high customs tariffs and various other types of restrictions, General Agreement for Tariffs and Trade (GATT) was formed by some countries.
  2. In 1994, it was decided by the member countries to set up a permanent institution for looking after the promotion of free and fair trade amongst nation and the GATT was transformed into the World Trade Organisation from 1st January 1995.
  3. WTO is the only international organisation dealing with the global rules of trade between nations. 
  4. It sets the rules for the global trading system and resolves disputes between its member nations. 
  5. WTO also covers trade in services, such as telecommunication and banking, and others issues such as intellectual rights. Benefits of forming trading blocs.
  6. Regional Trade Blocs have come up in order to encourage trade between countries with geographical proximity, similarity and complementarities in trading items and to curb restrictions on trade of the developing world.
  7. Today, 120 regional trade blocs generate 52 per cent of the world trade. These trading blocs developed as a response to the failure of the global organisations to speed up intra-regional trade.

Role of WTO in international trade 

  1. It ensures free and fair trade amongst the member nations. 
  2. It sets the rules for global trading system. 
  3. It resolves the disputes between the member nations.
  4. It also covers trade in services like telecommunication and banking etc. 
  5. It also deals with the issues like intellectual rights. 

Benefits of International trade

  1. International trade can prove to be detrimental to nations if it leads to dependence on other countries. 
  2. Uneven levels of development, exploitation and commercial rivalry leading to wars. 
  3. Global trade affects many aspects of life.
  4. It can impact everything from the environment to health and well-being of the people around the world. 
  5. As countries compete to trade more production and the use of national resources spiral.

Ports

  1. The chief gateways of the world of international trade are the harbours and ports. 
  2. The ports act as suction points of the resources from their hinterlands. 
  3. The extension of railways and roadways towards the interior facilitates the linking of the local markets to regional markets, regional markets to national markets and national markets to the international market. 
  4. Cargoes and travellers pass from one part of the world to another through these ports. 
  5. The ports provide facilities of docking, loading, unloading and the storage facilities for cargo.

Types of ports

  1. On the basis of traffic they handle 
  2. Industrial ports- These ports specialise in bulk cargo like grain and sugar, ore, oil, chemicals and similar materials. 
  3. Commercial ports- These ports handle general cargo packaged products and manufactured goods. These ports also handle passenger traffic. 

On the basis of location: 

  1. Inland ports- These ports are located away from the seacoast. They are linked to the sea through a river or a canal. Such ports are accessible to flat bottom ships or barges. 
  2. Out ports- These are deep water ports built away from the actual ports. These serve the parent ports by receiving those ships which are unable to approach them due to their large size. 

On the basis of specialized functions: 

  1. Oil ports- these ports deal in Processing and shipping of oil. Some of these are tanker ports and some are refinery ports. 
  2. Ports of call- These are the ports which generally developed as calling points on main sea routes, where ship used to anchor for refuelling, watering and taking food items.
  3. Pocket stations- These are also known as ferry ports. These packet stations are exclusively concerned with the transportation of passengers and mail across water bodies covering short distances. 
  4. Entrepot ports- These are collection centres where the goods are brought from different countries for export. 

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