International trade is the exchange of goods and services between countries.
What buyers gain
Lower prices
Goods made more cheaply abroad sell for less at home.
Greater choice
Fruit out of season, cars and phones from many countries.
More competition
Firms at home must cut costs or improve to keep their buyers.
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Trade also helps the firms that sell abroad, and the country as a whole.
What firms and the country gain
Larger markets
Selling to the world, not one country: far more buyers.
Economies of scale
Producing more cuts the cost of each unit.
Resources it lacks
Japan imports nearly all of its oil.
Foreign exchange
Export earnings pay for imports: Bangladesh earns most of its from clothing.
More efficient
Resources move to what each country does best.
The points to remember
- Write it like this: "Access to larger markets lets firms gain economies of scale, cutting the cost of each unit."
- "Exports earn foreign exchange, which pays for imports."
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Standard Level Paper 1 asked this in November 2025, as part (a) for 10 marks; the same question can appear at Higher Level.
Explain two possible benefits of international trade.
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How the 10 marks are given
| Marks | What your answer needs |
|---|---|
| 9–10 | Theory fully explained, terms used correctly all the way through, the diagram included and fully explained |
| 7–8 | Theory explained, terms mostly right, the diagram included and explained |
| 5–6 | Theory partly explained, some terms, the diagram included |
| 1–4 | Theory only described or stated; few relevant terms |