International economics deals with those international faces which influences the domestic economic conditions. So friends, in today’s article we are going to know about Nature and Scope of International Economics (International Economics Notes). So let’s discuss in details.
What is International Economics?
Meaning of International Economics – The international economics is a distinct branch of general economics which deals with those international forces which influence domestic economic condition as well as those which shape the economic relationship between countries, world economic integration and transition.
Why is international economics called a separate branch of economics?
International economics is regarded as a distinct branch of economics due to following reasons –
• The international economics explains the nature of trade among the different countries and also shows its impact on the domestic economy.
• The international economics explains the pattern and direction of international trade. Here we get the knowledge of different trade related concepts like terms of trade, balance of payments, etc.
• At present international economics studies the transection of currencies and capital among the different trading countries. Hence it explains the functions of IMF, world bank, Asian Development bank, etc.
• The international monetary theory deals with matters pertaining to balance of payments and international monetary system. It covers, area such as causes and methods of correcting balance of payment disequilibrium, exchange rate determination, international liquidity, etc.
• International economics analyses the reasons for and the effects of tariff and non-tariff retractions upon trade.
• After the second world war, different international institutions have been created to deal with the problem of international trade such as IMF, IBRD, WTO, etc.
The international economics examines the working and policies of these international institutions. The following paragraph we explained the nature and Scope of International Economics.
Nature of International Economics
• It is a distinct branch of the general economics which examines the theoretical base of the international trade among different countries.
• The international economics is both normative as well as positive economics. As a positive economics it explains various tools of the international trade. As a normative economics it explains the justification of trade.
• It is an applied branch of the general economics. This is because it uses different mathematical tools to analyze the international trade.
• International economics also uses monetary concepts in the international trade relation. It explains the international movement of capital and finance among the trading countries.
• International economics is a welfare economics which explains the international welfare on the basis of international trade relations.
Scope or Importance of International Economics
In the present day world international economics has immense scope or importance. The scope of international economics is explains below-
• The international economics studies the nature of trade and its impact on the national economy as well as international economics.
• In the competitive world economy it is essential to establish trade relations with other countries for better utilization of world resources. Basically trade channelizes resources from the developed to the poor countries.
• Through the international economics we can understand the functions and objectives of the international institutions like IMF, World bank, WTO, etc.
• Both developed and poor countries have to depend upon foreign capital for financing BOPs and economic development. International economics cultivates mutual co-operation among the countries which leads to easy flow of capital form one country to another.
• International economics establishes a trust among the trading countries which encourages flow of raw materials, technical knowledge and finance from advanced to backward economics.
So friends, this was the concept of the importance of study of international economics.
So friends, this was the concept of Nature and Scope of International Economics (International Economics definition or Notes). Hope you get the full details about it and hope you like this article.
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