THE ROLE AND IMPACT OF INTERNATIONAL ECONOMY DURING GLOBALIZATION ERA

Abstract

In the contemporary conditions of economization, one cannot think of the economic development of a country as well as the world economy without reciprocal economic relationships between the countries. Therefore, the foreign trade represents an important activity within the area of trading and economy in general. The foreign trade deals with economic relations of a country with the other countries of the world in the field of sales (export) and purchasing (import) of commodities and in performing various services. So, in other words, the foreign trade includes all economic transactions of the relevant country with the other countries of the world. Thus, in contemporary international economic conditions, there cannot be an autarkic economy (closed within). Therefore, there is an objective need that any country, regardless of socio-economic system and the level of development, must have economic relations with the outside world. International trade represents a main part of the world‘s economy and can be defined in the narrow and broad sense of the word. In the narrow sense of the word the foreign trade implies export and import of goods, while in the wider sense of the word are included various services as well. The economic relations are indispensable and are conditioned by a number of factors, and the most important are: different manufacturing conditions, the level of manufacturing costs, changes in sales, etc. The world‘s countries are located in different parts of the globe and are characterized with different climate conditions as well as with various natural resources. The factor that conditions the foreign trade is also the element of preferences in commodities, as well as the principle of comparative advantage. This principle leads to specialization and international division of labor, which consequently has an economic efficiency. Thus, we distinguish countries with absolute advantage and countries with comparative advantage for particular commodities.