International Trade Existent Is Globalization Essay

1043 Words Apr 19th, 2015 null Page
One very important aspect of international economics and what agreeably has made international trade existent is globalization. It’s the increasing connection and integration of people, organizations, countries and different cultures around the globe. We integrate through political, economical and social issues, trade and foreign investment. We’ve learnt that with globalization, no nations exist in economic isolation (Carbaugh). No country has achieved economic success without being open to the rest of the world. Even the very isolated North Korea has a growing trade and diplomatic relations with India. It’s the secluded country 's biggest trade partners and a major food aid provider (al.).
This wave of globalization has brought great economic interdependence among countries around the world. It changed the way economies interact though each other. One of which is the comparative advantage, also refers to as a relative advantage theory. The law of comparative advantage states, the citizen of each nation can gain by spending more of their time and resources producing goods where they have a relative advantage (Carbaugh). When countries specialize in producing goods where they have a lower opportunity cost, there will be a larger joint output and overall increase in economic welfare.
One example of that relation would be the comparative advantage of the United States in Japan in the production of and automobiles. There is a significant difference in the overall performance…

Related Documents