Ultra Revision Notes – International Trade
for Class 12 Geography (MP Board + CBSE 2026)
for Class 12 Geography (MP Board + CBSE 2026)
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🌍 Chapter 8: International Trade
1. Meaning of International Trade
When two or more countries exchange goods and services (Import–Export), it is called International Trade. This trade takes place across national boundaries and aims at economic profit, fulfilling the shortage of resources, and strengthening global relations.
2. Need / Reasons for Trade
- Uneven distribution of resources – Not every country possesses all types of resources.
- Benefit of Specialization – Countries produce goods in which they are most efficient.
- Economies of Scale – High production leads to lower costs per unit.
- Fulfilling domestic demand – Deficient products are imported from outside.
- Export of surplus production – To earn foreign exchange by selling extra goods.
3. Types of International Trade
(A) Based on Commodities| Type | Description |
|---|---|
| Visible Trade | Tangible goods – e.g., wheat, machinery, oil, clothes |
| Invisible Trade | Services – e.g., tourism, banking, software, insurance |
| Type | Meaning |
|---|---|
| Import | Buying goods/services from another country |
| Export | Selling goods/services to another country |
| Type | Description |
|---|---|
| Bilateral Trade | Direct trade between two specific countries |
| Multilateral Trade | Trade among many countries (regulated by WTO) |
4. Balance of Trade (BOT)
The difference between the value of a country's exports and imports is called the Balance of Trade.
| Condition | Meaning |
|---|---|
| Favorable BOT | Export > Import (Profit for country) |
| Unfavorable BOT | Import > Export (Trade Deficit) |
| Balanced BOT | Export ≈ Import |
India's Balance of Trade generally remains unfavorable because the import of crude oil and heavy machinery is very high.
5. Factors Affecting International Trade
| Factor | Impact |
|---|---|
| Resource Availability | Determines production and export capacity |
| Transport & Communication | Affects the speed and cost of trade |
| Government Policy | Determines Tariffs, Quotas, and trade rules |
| Political Stability | Affects long-term trade agreements and relations |
6. Major International Trade Routes
[attachment_0](attachment)- North Atlantic Sea Route: The world's busiest trade route (USA ↔ Europe).
- Suez Canal Route: Connects Europe and Asia, reducing distance and time.
- Panama Canal Route: Connects the Atlantic and Pacific Oceans.
- Cape of Good Hope Route: Passes around the southern tip of Africa.
7. Major Trade Organizations
- WTO (World Trade Organization): Formulates global trade rules and promotes multilateralism.
- IMF (International Monetary Fund): Ensures global monetary stability.
- World Bank: Provides loans for development projects.
- SAFTA: Free trade agreement among South Asian countries.
8. India's International Trade
Main Exports: Software services, gems & jewelry, textiles, tea, engineering goods.
Main Imports: Crude oil (Petroleum), gold, electronic items, chemicals.
Major Partners: USA (largest export market), China (largest import source), UAE.
9. Important Terminology
- Tariff: A tax imposed on imported or exported goods.
- Quota: The maximum limit on the quantity of goods to be imported.
- Dumping: Selling goods in a foreign market at a price lower than the cost of production.
- Free Trade: Trade between countries without any restrictive barriers or taxes.
🧠 Exam-Ready One Liners (Facts to Remember)
- Maritime transport is the cheapest and largest medium of international trade.
- Trade in services is known as 'Invisible Trade'.
- The Suez Canal has reduced the distance between Europe and Asia by approx 7000 km.
- USA is India's largest partner for service exports.
- A trade deficit occurs when the value of imports exceeds the value of exports.
- India's greatest trade strength is its Software and Service sector.
50 One-liner Questions and Answers – International Trade
for Class 12 Geography (MP Board + CBSE)
for Class 12 Geography (MP Board + CBSE)
🎯 Quick Revision: Important Q&A
Q1. What is International Trade?
Ans. The exchange of goods and services (Import-Export) between different countries.
Q2. What is Visible Trade?
Ans. Trade of tangible goods that can be seen or touched, such as machines, grains, or oil.
Q3. What is Invisible Trade?
Ans. Trade involving services, such as tourism, banking, and software.
Q4. What is the meaning of Import?
Ans. Buying goods or services from another country.
Q5. What is the meaning of Export?
Ans. Selling goods or services to another country.
Q6. What does Balance of Trade (BOT) indicate?
Ans. The difference between the value of a country's exports and imports.
Q7. When does a Favorable Balance of Trade occur?
Ans. When Exports > Imports.
Q8. When does an Unfavorable (Deficit) Balance of Trade occur?
Ans. When Imports > Exports.
Q9. What is Balanced Trade?
Ans. When Imports are approximately equal to Exports.
Q10. In what are international trade payments usually made?
Ans. Foreign currency (such as Dollar, Euro, or Pound).
Q11. Which duty is imposed to regulate trade?
Ans. Custom Duty.
Q12. What is a Tariff?
Ans. A tax imposed on imported or exported goods.
Q13. What is a Quota?
Ans. A limit set on the quantity of a good that can be traded.
Q14. What is the function of the World Trade Organization (WTO)?
Ans. To create and implement rules for multilateral trade.
Q15. What is the main function of the IMF?
Ans. To ensure global monetary stability and provide financial assistance.
Q16. What is the function of the World Bank?
Ans. To provide loans for development projects.
Q17. What is SAFTA related to?
Ans. Free trade among South Asian countries.
Q18. Which is the busiest maritime trade route?
Ans. The North Atlantic Route.
Q19. Which regions does the Suez Canal trade route connect?
Ans. Europe and Asia.
Q20. Which oceans does the Panama Canal connect?
Ans. The Atlantic and the Pacific.
Q21. What is the primary medium of international trade?
Ans. Sea transport (Maritime).
Q22. How did globalization affect trade?
Ans. It made trade faster, cheaper, and more digital.
Q23. What is India's main import product?
Ans. Crude Oil (Petroleum).
Q24. What is India's major service export?
Ans. Software and IT-BPO services.
Q25. What are India's major agricultural exports?
Ans. Rice, tea, and spices.
Q26. What are India's major industrial exports?
Ans. Textiles and Gems & Jewelry.
Q27. Which country is India's largest import partner?
Ans. China.
Q28. Which country is India's largest service trade partner?
Ans. USA.
Q29. What is OPEC related to?
Ans. Organization of Petroleum Exporting Countries.
Q30. Of what was GATT the predecessor?
Ans. The WTO.
Q31. Seaports are part of which economic activity?
Ans. Tertiary activity.
Q32. Which factor most affects trade?
Ans. Availability of resources and market demand.
Q33. What is the main source of earning foreign exchange?
Ans. Exports.
Q34. What is the objective of trade agreements?
Ans. To increase trade between nations and reduce barriers.
Q35. What is the purpose of protectionist policies?
Ans. To protect domestic industries.
Q36. What is a benefit of Free Trade?
Ans. Global competition and market expansion.
Q37. What is a disadvantage of Free Trade?
Ans. Pressure on local/domestic industries.
Q38. What does a Trade Surplus mean?
Ans. Exports are greater than imports.
Q39. What does a Trade Deficit mean?
Ans. Imports are greater than exports.
Q40. How is India's balance of trade generally categorized?
Ans. Unfavorable (Deficit).
Q41. By what name are charges related to ports known?
Ans. Custom duties.
Q42. What is strengthened by international trade?
Ans. Global economic relations.
Q43. Specialization by countries is based on which principle?
Ans. Comparative Advantage.
Q44. What determines trade routes?
Ans. Geographical location and transport facilities.
Q45. Why has the use of container ships increased?
Ans. For safe and large-scale cargo transportation.
Q46. Digital services are part of which trade?
Ans. Invisible Trade.
Q47. What is the cheapest mode of trade?
Ans. Water transport.
Q48. Who sets quality standards in trade?
Ans. International organizations and agreements.
Q49. How does a country benefit from increasing exports?
Ans. Economic growth and foreign exchange earnings.
Q50. What is the long-term impact of international trade?
Ans. Economic development, cultural exchange, and global integration.
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