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International trade

A ship transporting crude oilA ship transporting crude oilInternational trade is the exchange of money, goods and services across international borders. Exports are goods and services that are sent out for sale to another country. Imports are goods and services that are bought from another country. Trade between nations has been in existence for around 5000 years. It probably began between the ancient kingdoms of Egypt and the Middle East. Today, a large percentage of most countries’ gross domestic product (the value of all goods and services produced within a country) is exported. The goods that are most traded between nations are fuels, including oil and gas, followed by electronic equipment and machinery. The USA is the country that exports the greatest amount of goods and services around the world.

A chart showing exchange ratesA chart showing exchange rates

Exchange rates

Exchange rates make it possible for items to be traded between different currency zones, and for people from one currency zone to buy things in another. Exchange rates are the prices at which currencies can be exchanged with one another. Constantly changing, they are determined by the foreign exchange market, a network of financial centres around the world (such as in London, New York and Tokyo) where buyers and sellers trade in currencies. The currencies of countries with stability and good economic growth—that is, plenty of goods produced and bought, and high employment—will tend to sell for a higher price.

The most commonly traded commodity on the international commodities markets is crude oil. The second most traded commodity is coffee.

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