Increasing globalisation, driven by the accelerated digitisation process that has occurred in recent years, is blurring geographical barriers, which is why commercial interdependence between countries is on the up. In fact, despite the uncertain situation that the world has been through in recent times, the United Nations expects the volume of international trade will increase by 3% in the next 12 months.
In this context, it is understandable that more and more young people are interested in international trade or international business. It should be noted that, although both terms are often used interchangeably, taking a Global Bachelor´s Degree International Business will help you become familiar with the differences between foreign trade and international business – something that will be key so that you can direct your professional career in the direction that most interests you
International business is an economic activity that involves the exchange of goods and services between countries across the world, for which different currencies and international payment methods are used. Therefore, it encompasses all transactions that occur between nations that have trade agreements.
The countries that participate in this exchange have "open economies" since their trade is open to the outside world. Therefore, they not only acquire goods and services from abroad through imports, but also export their products and services.
International business allows better use of available resources and expands the productive capacity of countries. It also contributes to optimising production costs, create employment, promote greater specialisation and stimulate the growth of the economy worldwide.
International trade, or foreign trade, as it is otherwise known, is the purchase or sale of goods and services outside national geographic borders, so that the parties involved in the commercial transaction are in different countries. Its main objective is to satisfy the demand of local consumers by taking advantage of the benefits or products that other countries can offer.
Foreign trade not only expands the capacity of the domestic market and provides access to a greater variety of products from third countries, but also allows surpluses to be sold in foreign markets when production exceeds domestic demand, thus contributing to the growth of the national economy.
In Spain, for example, exports of goods in 2021 marked an annual record high, exceeding more than 300 billion euros for the first time, according to data on foreign trade in merchandise provided by government data. On the other hand, imports also reached 342 billion euros, marking another annual record high, which reveals that foreign trade has contributed significantly to the growth of Spanish GDP.
In general, no country is completely self-sufficient, but depends on other nations to import the raw materials or merchandise it needs and to export the most abundant products or services within its territory that are in greater demand abroad. This interdependence gives rise to two types of trade that complement each other: foreign trade and international business.
The difference between international trade and foreign trade lies in the breadth of both concepts and their geographical scope. International trade refers to the trade of all goods and services worldwide while foreign trade refers fundamentally to the transactions of a country with the rest of the world.
Therefore, international business covers a much broader scope since it refers to commercial transactions that are carried out in the world. On the other hand, foreign trade occupies a more restricted space and limited to the relations of one country with another. That is, while international trade has a global scope, foreign trade is limited to the commercial relationship of one nation with others.