International markets are important to most firms; even if they do not produce for the
export market, they may well be dependent upon raw materials which are imported and
they will almost definitely be affected by movements in exchange rates. The UK, like all
other advanced industrial countries, is highly dependent upon international markets
and that dependence has grown over the years.What makes international trade different
from trade within a country is that the former needs a system for international payments.
It is essential for businesses to have an understanding of international markets,
exchange rates and the balance of payments. In this chapter we start with a standard theoretical
view of international trade and why trade takes place, before concentrating on
practical issues such as exchange rates, their effects on business and the operation of
multinationals. This chapter concludes with a discussion of the process of globalisation.