Trade is part and parcel of the life of human being 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 exchange of goods as well as 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 gets jobs by preparing the commodity to be ready for export. For a commodity to be exported, some processes are required. 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 to people of that country. Global trade promotes the production of companies that exports their goods (Chaney, 2018). This enables exporters more productive than domestic companies.
Importing of goods creates competition between the domestic product and the imported products leading to reduction of prices to the consumers. This is an advantage to the consumers because they are able to purchase goods at a lower cost.
Disadvantages of international trade
International trade reduces production of goods in domestic industries. This causes some people 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 productions. This leads to lose 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 have more positive effects than negative ones. For a country to grow economically globally, it must involve in exporting and importing of goods.
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’économique, 51(1), 156-185.
Chaney, T. (2018). The gravity equation in international trade: An explanation. Journal of Political Economy, 126(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.