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Business and Finance

Advantages Of International Trade

Trade is part and parcel of the life of human beings as it is the key activity that improves the living standards of mankind. Everybody takes part in trade in one way or the other. International trade deals with the exchange of goods and services between different countries. Importing and exporting of goods is involved. This essay is aimed at critically presenting, discussing the advantages as well as the disadvantages of international trade.

Through trade, many countries have been able to exchange their commodities, hence enhancing the global economy. This is because every country contributes a certain percentage towards global economy by exporting a certain commodity (Akerman, 2018).

Advantages of International trade

Trade creates employment. Through international trade, many people get jobs by preparing the commodity to be ready for export. Some processes are required for a commodity to be exported. These processes are done by people employed in various areas of production. Moreover, the domestic companies can also produce goods for foreign markets. These domestic companies also create job opportunities for people of that country. Global trade promotes the production of companies that export their goods (Chaney, 2018). This enables exporters to be more productive than domestic companies. Importing goods creates competition between domestic products and imported products, leading to a reduction in prices for consumers. This is an advantage to consumers because they are able to purchase goods at a lower cost.

Disadvantages of International trade

  • International trade reduces the production of goods in domestic industries. This causes some people to lose their jobs, hence lowering their standards of living.
  • International trade interferes with the production of traditional farmers in a country due to improved methods of production. This leads to a loss of markets for their goods, hence affecting their way of living negatively (Chaney, 2018).

Therefore, international trade has both negative and positive effects, though international trade has more positive effects than negative ones. For a country to grow economically globally, it must be involved in exporting and importing of goods.

References

Akerman, A. (2018). A theory on the role of wholesalers in international trade based on economies of scope. Canadian Journal of Economics/Revue canadienne d’économique51(1), 156-185.
Chaney, T. (2018). The gravity equation in international trade: An explanation. Journal of Political Economy126(1), 000-000.
Jones, R. W., & Kierzkowski, H. (2018). The role of services in production and international trade: A theoretical framework. World Scientific Book Chapters, 233-253.

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