Gains and Benefits of International Trade
Introduction
The concept of international trade starts from over many years a go. According to the pre historical records it has been define as the most success. International trade allows us to expand our markets for both goods and services that otherwise may not have been available to us. The market contains greater competition and therefore more competitive prices, which brings a cheaper product home to the consumer. International Trade takes place because of the variations in productive factors in different countries. The variations of productive factors cause differences in price in different countries and the price differences are the main cause of international trade. There are numerous advantages of international trade accruing to all the participants of such trade.
Benefits of International Trade
Efficient use of productive factors:
One of the biggest benefits of international trade relates to the remunerations accruing from territorial division of labor and international specialization. International trade enables a country to specialize in the production of those commodities in which it enjoys special benefits. All countries are not equally endowed with natural resources and other facilities for the production of goods and services of various kinds. Some countries are richly endowed with land and forest resources, which others happen to have abundant capital resources. Some others have abundant supplies of labor power. Without international trade, a country will have to produce all the goods it requires irrespective of the costs involved. But international trade enables a country to produce only those goods in which it has a comparative advantage or an absolute advantage and import the rest from other countries. This leads to international specialization or division of labor, which, in turn, enables efficient use of the productive factors with minimum wastages. Specialization would also
The concept of international trade starts from over many years a go. According to the pre historical records it has been define as the most success. International trade allows us to expand our markets for both goods and services that otherwise may not have been available to us. The market contains greater competition and therefore more competitive prices, which brings a cheaper product home to the consumer. International Trade takes place because of the variations in productive factors in different countries. The variations of productive factors cause differences in price in different countries and the price differences are the main cause of international trade. There are numerous advantages of international trade accruing to all the participants of such trade.
Benefits of International Trade
Efficient use of productive factors:
One of the biggest benefits of international trade relates to the remunerations accruing from territorial division of labor and international specialization. International trade enables a country to specialize in the production of those commodities in which it enjoys special benefits. All countries are not equally endowed with natural resources and other facilities for the production of goods and services of various kinds. Some countries are richly endowed with land and forest resources, which others happen to have abundant capital resources. Some others have abundant supplies of labor power. Without international trade, a country will have to produce all the goods it requires irrespective of the costs involved. But international trade enables a country to produce only those goods in which it has a comparative advantage or an absolute advantage and import the rest from other countries. This leads to international specialization or division of labor, which, in turn, enables efficient use of the productive factors with minimum wastages. Specialization would also
References: Benefits of International Trade – ‘Economy Watch’ - http://www.economywatch.com/international-trade/benefit.html- (30 June 2010) Benefits of international trade [Partners in international trade] – ‘HSBC case study’ -http://businesscasestudies.co.uk/hsbc/partners-in-international-trade/benefits-of-international-trade.html#axzz2VzrAkNgR(2013)