Chapter 1: International Interdependence
1.4 ADVANTAGES & DISADVANTAGES
OF INTERNATIONAL TRADE
Advantages of International Trade
The fundamental reason for international trade is to sell something that we don’t need and to buy something we do need. Trade creates jobs, attracts investments, attracts new technology and materials, and offers Canadians a wider choice in products and services.
People spend, save, or pay taxes with the money they earn in their jobs. The government uses taxes to provide services, which creates more jobs. When people save, the capital markets lend money to others, who will spend it on consumer goods, or open or expand a business, therefore creating new jobs. When people spend money, it creates demand, which creates new jobs.
If something occurs to slow this expansion, the cycle reverses. Ex. higher taxes, higher interest rates.
Meeting our needs
Trade is always balanced if it is fair. If 2 people trade baseball cards and one gives another 6 cards, they should get 6 back.
Many businesses can create a surplus inventory of goods and services. Canadian farms produce more food than Canadians can eat, Canadian manufacturers make more products than Canadians use, and Canadian service providers can provide ser vice to other countries.
Canadians cannot produce fruits like bananas and oranges, and some products we cannot make. These products are imported. Both trading partners get something they need by trading something they don’t need.
Unlike the battering that used to go on between trading partners, now businesses receive money from selling their products or services to foreign businesses. When foreign businesses buy Canadian products it creates jobs for Canadians. Exports are very important to Canadians they create one out of three Canadian jobs. 40 percent of what Canadians produce is exported. 1 billion exports means 6000 jobs for Canadians. When trade is balanced businesses remain profitable and may...
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