International Trade allows countries to expand their markets for both goods and services that otherwise may not have been
available domestically.
available domestically.
As a result of international trade, the market contains greater competition, and therefore more competitive prices, which brings a cheaper product home to the consumer.
KEY TAKEAWAYS
International trade is the exchange of goods and services between countries.
Trading globally gives consumers and countries the opportunity to be exposed to goods and services not available in their own countries, or which would be more expensive domestically.
KEY TAKEAWAYS
International trade is the exchange of goods and services between countries.
Trading globally gives consumers and countries the opportunity to be exposed to goods and services not available in their own countries, or which would be more expensive domestically.
The importance of international trade was recognized early by political economists like Adam Smith and David Ricardo.
If a country cannot efficiently produce an item, it can obtain the item by trading with another country that can. This is known as specialization in international trade.
According to the international trade theory, even if a country has an absolute advantage over another, it can still benefit from specialization.
International trade not only results in increased efficiency but also allows countries to participate in a global economy, encouraging the opportunity for foreign direct investment (FDI), which is the amount of money that individuals invest into foreign companies and assets.
For the receiving government, FDI is a means by which foreign currency and expertise can enter the country. It raises employment levels, and theoretically, leads to a growth in gross domestic product. For the investor, FDI offers company expansion and growth, which means higher revenues.
As it opens up the opportunity for specialization, and therefore more efficient use of resources, international trade has the potential to maximize a country's capacity to produce and acquire goods.
According to the international trade theory, even if a country has an absolute advantage over another, it can still benefit from specialization.
International trade not only results in increased efficiency but also allows countries to participate in a global economy, encouraging the opportunity for foreign direct investment (FDI), which is the amount of money that individuals invest into foreign companies and assets.
For the receiving government, FDI is a means by which foreign currency and expertise can enter the country. It raises employment levels, and theoretically, leads to a growth in gross domestic product. For the investor, FDI offers company expansion and growth, which means higher revenues.
As it opens up the opportunity for specialization, and therefore more efficient use of resources, international trade has the potential to maximize a country's capacity to produce and acquire goods.
What is certain is that the global economy is in a state of continual change, and, as it develops, so too must its participants.
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