Nature of International Economics | Scope of International Economics

International economics deals with those international forces which influences the domestic economic conditions of a country. Hi friends, in today's article we are going to know about Nature of International Economics and also know the Scope of International Economics. So let's discuss this.

Nature of International Economics

The nature of international economics can be explained as follows-

(i) The international economics is an applied branch of general economics. Particularly it is an applied branch of macro economics. It uses economic tools and principles to judge the economics decisions in case of international trade and transaction.

(ii) International economics is a theoretical economics. This is because like other economics, it has own models, principles and laws. As for example H.O. Theory, Leontief Paradox

(iii) International economics is a normative economics. It means that the international economics is concerned with welfare aspect of the trade and transaction. Different international agencies were established to look after the welfare aspect of the trade relations. As for example - The world bank, IMF, etc.

(iv) The international economics is a descriptive economics also which describes the flows of different policies among the different countries. As for example - free trade, quotas, etc.

Nature of International Economics | Scope of International Economics
(v) International economics is also take into account international human relationships among different countries of the world. It promotes international brotherhood, peace and unification.

Scope of International Economics

International economics and international trade are playing significant role in economic development and growth process. The scope of international economics or the importance of international economics are mentioned in the following ground-

• Technical Progress - When a country has decided to specialize in the production of particular goods with the help of particular technology, through international trade that technological knowledge spreads world wide.

• Easy flow of Capital - LDC and UDC are suffering from acute shortage of capital. It is the international economics which helps to flow capital resources from developed to underdeveloped areas.

• Promotion of Competition - The growing international transactions among the countries promotes competitions.

• International Co-Operation - Modern economic growth is closely associated with development and relationship. International trade promotes international co-operation to fight against poverty, hunger and injustice.

• Growth of international agencies - In order to promote trade relations among the member countries several international institutions were established. As for example - The European economic union.

• Promotion of export trade - International economics always helps to promote export trade sector of the member countries. This is because rising export denotes rising GDP.

• International Division of labour - International economics promotes international division of labour among the different countries of the world.

• Promotion of peace and Brotherhood - International transaction promotes not only trade but also peace and brotherhood among the trading nations.

• Stabilization of Prices - Growing international trade reduces crisis of goods and services. As a result, it stabilizes the international price level.


So friends, this was the concept of nature and scope of international economics. Hope you get the full details about it and hope you like this article.

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