The Advantages of International Trade - 803 Words

2.0 International Trade International trade is the exchange of goods, capital and services between countries. This type of trade gives rise to a world economy. The prices or supply and demand are affected by global events or activities. For example, Political change in Asia could result in an increase in the cost of labor, thereby increasing the manufacturing costs for an American sneaker company based in Malaysia, which would then result in an increase in the price that you have to pay to buy the tennis shoes at your local mall. A decrease in the cost of labor, on the other hand, would result in you having to pay less for your new shoes. Trading globally gives consumers and countries the opportunity to be exposed to capital, goods and services not available in their own countries. Almost every kind of product can be found on the international market like food, clothes, spare parts, oil, jewelry, wine, stocks, currencies and water. Besides we can purchase the goods from other countries, we also can get the services like tourism, banking, consulting and transportation. A product that is sold to the global market is an export, and a product that is bought from the global market is an import. Imports and exports are accounted for in a countrys current account in the balance of payments. Export is one of the ways of a country to increase their cash inflow from other countries. 2.1 Theory of International Trade The basis for international trade is the specialization.Show MoreRelatedAdvantages And Disadvantages Of International Trade1334 Words   |  6 Pagesfrom Japan. International trade has advantages and disadvantages for everyone involved. It wasn’t that long ago that the items we owned only came from within our own country. So why is it that international trade exists and what advantages does this bring to a developed country and what advantages does this bring to a developing country? International trade also has its downfalls. In the following assessment I will look at both the advantages and disadvantages of international trade and how weRead MoreAdvantages Disadvantages of International Trade869 Words   |  4 PagesChapter 1: International Interdependence 1.4 ADVANTAGES DISADVANTAGES OF INTERNATIONAL TRADE Pg 22-27 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 governmentRead MoreInternational Trade : A Competitive Advantage1261 Words   |  6 Pages C lassical theories of international trade suggest that comparative advantage exist in the factor endowments that a country may be fortunate enough to inherit. Factor endowments include land, natural resources, labor, and the size of the local population. Michael E. Porter claimed that a nation can create new advanced factor endowments such as skilled labor, a strong technology and knowledge base, government support, and culture. Porter used a diamond shaped diagram as the basis of a framework toRead MoreAdvantage and Limitation of International Trade1603 Words   |  6 PagesList at least one advantage and one limitation of international trade as identified in the simulation. One of the advantages is that free trade could bring about peace since countries engage in commerce with one another. There is also the aspect of efficiency where international trade enhances competition and the efficiency of technology. It promotes dynamism, productivity, and innovation within a specific economy. On the other hand, international trade produces competition to domestic productsRead MoreCompetitive Advantages And International Trade1636 Words   |  7 PagesMirza Beg 5/11/15 Professor Shahrouri Econ 335 Competitive Advantages and International Trade Globalization has made it far easier for people to get their hands on the luxury items they desire so much, but we hardly contemplate the origins of many of the luxuries we take for granted in the U.S. With a debt fast approaching the new imaginary ceiling of 16.394 Trillion dollars, the U.S. owes a lot of money. Much of this is to do with waging illegal wars in the Middle East and spending money creatingRead MoreInternational Trade : A Comparative Advantage Essay1944 Words   |  8 Pagesheavily on trade. According to a recent report on NAFTA, â€Å"Since 1992, nearly 20 million new jobs have been created in the U.S., in part due to the 1994 NAFTA agreement. Total trade between the NAFTA partners -- the U.S., Canada, and Mexico -- rose from $293 billion in 1993 to more than $475 billion in 1997, and has increased since. † (Bowman, Free Trade). It is obvious evidence that international trade is beneficial to the US economy, at least in the 1990s. The theory of comparative advantage explainsRead MoreInternational Trade : Comparative And Competitive Advantage1512 Words   |  7 Pages International trade theories are simply theories that explain how imports and exports work between different countries. Hence the name international trade. In this paper I will be reviewing different theories of international trade, explain the difference between comparative and competitive advantages, and answering three important questions. What the underlying economic rationale for international business activity is, why trade takes place, and the gains from trade and investment. I will firstRead MoreInternational Trade Theory Of Comparative Advantage And Absolute Advantage1485 Words   |  6 PagesSeveral theories about international trade explain why countries have the opportunity to trade, theory of comparative advantage and absolute advantage. Adam Smith came up with the theory of absolute advantage where the country that produces more of one good that another country has simply an absolute advantage over it. This theory normally constructed with two commodities and two countries. In Schuhmachers article â€Å"Adam Smith’s theory of absolute advantage and the use of doxography in the historyRead MoreAdvantages Of International Trade For Developing Nations1313 Words   |  6 PagesAdvantages of international trade for developing nations Although the concept of free trade and globalisation may subtly imply a polarity between the developed and developing worlds, it can be argued that, in order to function successfully, the pressure to create a competitive and comparative advantage hold all nations on a level-playing field. Sinclair Davidson (2015) cited David Ricardo (1821) in his argument that foreign trade is, indeed, beneficial to a country, for a number of reasons. By reducingRead MoreBusiness: International Trade and Comparative Advantage1029 Words   |  5 PagesHOMEWORK 11 (Last HW – Due 4/28) Read the Logitech case and answer the following questions. 1: In a world without trade, what would happen to the costs that American consumers would have to pay for Logitech’s products? 2: Explain how trade lowers the costs of making computer peripherals such as mice and keyboards. 3: Use the theory of comparative advantage to explain the way in which Logitech has configured its global operations. Why does the company manufacture in China and Taiwan, undertake