International Trade
International Trade
International trade is the exchange of goods and services between countries. (“Trade Foreign Policy, Diplomacy and Health,” n.d).
The exact origin of international trade is hard to pinpoint but exchange of goods between nations have been conducted for thousands of years. Trade by individuals was necessitated out of the absence of self-sufficiency in human beings. In the same way, international trade was born out of the fact that no nation is super-abundant in every resource. International trade, therefore, is a necessity. Free trade is a policy by which government does not discriminate against imports by applying tariffs or quotas or interfere with exports by applying subsidies. (“Free Trade,” n.d.) Even though international trade, just like domestic trade is a necessity, especially with increasing globalization, it is seldom free, i.e., international trade is almost never without barriers. These can be tariff or non-tariff barriers. In 1817, a British political economist, David Ricardo, published a book titled: On the Principles of Political Economy and Taxation. In the book, David Ricardo advanced The Theory of Comparative Advantage and argued that all nations can benefit from free trade irrespective of their levels of efficiency. He argued that a country does not have to be absolutely efficient in the production of any good before she can benefit from international trade. It is obvious and demonstrable that free international trade has immense benefits.
Some of the benefits of free international trade are:
More alternatives for consumers as a result of increased competition.
Promotes efficiency in production because countries tend to trade goods they are not terribly bad at producing.
Obstruction to international trade means that consumers pay more for products that could have been gotten for a cheaper price. This raises the cost of living.
These and other benefits of free trade are used by proponents of
International trade is the exchange of goods and services between countries. (“Trade Foreign Policy, Diplomacy and Health,” n.d).
The exact origin of international trade is hard to pinpoint but exchange of goods between nations have been conducted for thousands of years. Trade by individuals was necessitated out of the absence of self-sufficiency in human beings. In the same way, international trade was born out of the fact that no nation is super-abundant in every resource. International trade, therefore, is a necessity. Free trade is a policy by which government does not discriminate against imports by applying tariffs or quotas or interfere with exports by applying subsidies. (“Free Trade,” n.d.) Even though international trade, just like domestic trade is a necessity, especially with increasing globalization, it is seldom free, i.e., international trade is almost never without barriers. These can be tariff or non-tariff barriers. In 1817, a British political economist, David Ricardo, published a book titled: On the Principles of Political Economy and Taxation. In the book, David Ricardo advanced The Theory of Comparative Advantage and argued that all nations can benefit from free trade irrespective of their levels of efficiency. He argued that a country does not have to be absolutely efficient in the production of any good before she can benefit from international trade. It is obvious and demonstrable that free international trade has immense benefits.
Some of the benefits of free international trade are:
More alternatives for consumers as a result of increased competition.
Promotes efficiency in production because countries tend to trade goods they are not terribly bad at producing.
Obstruction to international trade means that consumers pay more for products that could have been gotten for a cheaper price. This raises the cost of living.
These and other benefits of free trade are used by proponents of
References: 1. “World Health Organization,Trade, Foreign Policy, Diplomacy and Health. (2013). Retrieved August 16, 2013, from http://www.who.int/trade/glossary/story090/en/index.html 2. Free Trade. (n.d). Retrieved August 16 2013, from (http://en.wikipedia.org/wiki/Free_trade) 3. Krugman, P., Obstfeld, M., Melitz, M. International Economics: Theory and Policy. 9th ed. Addison-Wesley, 2012. 4. Chang, H. Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism. Chapter 2, pp. 40. Bloomsbury, 2008.