International Trade Theory and Practice

Running head: INTERNATIONAL TRADE THEORY AND PRACTICE
International Trade Theory and Practice
Name of the Student
Name of the University
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INTERNATIONAL TRADE THEORY AND PRACTICE1
Table of Contents
Introduction......................................................................................................................................2
Literature review..........................................................................................................................3
Main Body...................................................................................................................................5
Conclusion.....................................................................................................................................12
References......................................................................................................................................14

INTERNATIONAL TRADE THEORY AND PRACTICE2
Introduction
The exchange of goods, capital and services across the territories or boundaries globally,
is known as the international trade. All the countries of the world participates in the world trade.
It helps to boost the domestic as well as international trade around the world. Trade is one of the
major contributor in the gross domestic product (GDP) of the country. There is political,
economic and social importance of the international trade. As a result, it helps the countries in
many ways. The process of international trade is more complex than the domestic trade. The
vital factors that influences the international trade include economy, currency, government
policies, laws, markets and judicial systems. There exists significant organizations that justifies
and smoothens the process of international trade between countries. One such essential
organization is the World Trade Organization (WTO). The growth and facilitation of the
international trade is ensured by these organizations. There are a wide range of merits and
demerits of the international trade.
One of the significant country participating in the international trade is New Zealand
(Saunders & Driver, 2016). It is situated in the southwestern Pacific Ocean. The capital city of
the New Zealand is Wellington. The currency of the country is New Zealand dollar ($) (NZD). It
is recognized as one of the developed countries of the world. The country makes significant
improvements in the field of economic freedom, quality of life, protection of civil liberties,
education and health, which contributes largely in the economic development of the country.
Previously, it was a protectionist economy in 1980s. Later, it transformed itself into a liberalized
free trade economy. As a result, the economy get benefitted significantly from the international
free trade (Nzherald.co.nz, 2020). The role of the globalization is also major in the economic
growth of the country. There are several trading partners of the New Zealand. The largest market

INTERNATIONAL TRADE THEORY AND PRACTICE3
share of the export category is dominated by the agricultural goods of the country. The economy
is mainly dominated by the service sector.
Literature review
The economy of New Zealand is an advanced market economy. New Zealand is known
as one of the trade dependent countries of the world. The country is supported by the open and
free trade. One of the most open market economies of the world is New Zealand. The country
adopted market approach in 1980 in order to develop the export sector of the country (Jones &
Kierzkowski, 2018). There were several limitations in the economy of New Zealand such as
minor natural resources endowments and isolated position of the country. The country was
situated from way from the major importers of the world. However, the change in global trade
conditions provides it with opportunities to grow as a leading trading partner of the world. The
global trade scenario changed in last 20 years dramatically (Mfat.govt.nz, 2020). Thus, it helped
in transformation of New Zealand from small economy to broad economy driven by
opportunities. These opportunities provided comparative advantage to New Zealand in free trade.
The economy of the country is supported by the private-public partnership. In order to, boost the
international trade there were various export incentives provided by the government (Edmond,
Midrigan & Xu, 2015). Another measure taken the government of New Zealand was import
protection. Other factors that contributed significantly in the development of the trade were
regulatory policies and huge investment.
The trade strategy of the New Zealand include inclusive and progressive trade. The
country signed several free trade agreements with other trading partners. One of the major
organization in international trade is WTO. New Zealand is one of the important member
countries of the WTO, which helps in global free trade negotiations. The country first started