International Trade Importance

Improved Essays
International trade plays a key role both for country’s economy and for global economy. International trade or free trade can be very beneficial, as it provides much bigger market, and also allows producers to produce their goods much cheaper. These characteristics are mainly important for small economies, as they produce much expensive and do not have bigger market because of little specter of trade. International trade is of great importance for the developing countries, as it can boost their productive capabilities and enhance their economies. “Trade openness” is a significant determinant of GDP. This openness gives the opportunity to increase welfare and standards of living.
Benefits of free trade
First of all, free trade enables countries
…show more content…
The technology progress have given the people the opportunity to do business internationally. Open trade allows the countries to find the cheapest things all over the world and offer the best options for the consumers. These leads to the competition among producers, and makes products much cheaper. However, there are ones who argue that globalization can lead the wealthy companies to take advantage of poorer ones, as in this case, they can exploit the cheap labor. The supporters of anti-globalization movement mention, that globalization can abolish the diversity and lead to homogenized world, where Western traditions overwhelm. However, supporters of globalization say, that nations, who are opened to global economy, are much more prosperous and have better standards of living.
The EU, international trade and developing
…show more content…
The government, in this case, has little interference. In today’s market system, it is very easy for the large company to manipulate the market. Today’s market outcomes can be influenced by the monopolies or oligopolies. However, some countries set competition law which brings back competitiveness. The spread of free trade, and creation of free market system becomes possible if the government does not hinder the international trade, and reduces or removes the taxes. Free market has undergone some changes. Nowadays, the companies not focus on their influence on product prices, but they redefine technologies, and manipulate the consumer tastes by advertising and brand image

Related Documents

  • Improved Essays

    Why Consumers Need Trade

    • 1236 Words
    • 5 Pages

    The pros to a Trade agreement are the consumers’ needs are met, making them want to spend more money into the market on goods and services that they want. Then it also benefits in imports and export agreements with the expansion of products being placed out for consumers to choose from and creates a competitive market to increase the quality of products sold to the buyers. This all has positives and there is a bad side with nations having different tariffs on their goods and services. This can create a lot of conflict, but is the reason we need the trade agreements so that nations can create a better economy for everyone. Trade agreements all around are good for all nations to be in to help satisfy the consumers’ needs and wants.…

    • 1236 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    So the country produce goods in large scale and this leads to reduce cost of the production as well as price of commodities. International trade increase the efficiency of production due to international competition because producers have to produce better quality goods at the minimum cost to competing with other producers in the world. Because of this competition consumers can consume better and quality goods at a minimum price. International trade is essential factor for the growth of globalization, transportation…

    • 2265 Words
    • 10 Pages
    Improved Essays
  • Improved Essays

    As companies will do what is better for their interests, if they are able to source labour that is cheaper in another country, they may make the decision to move operations to that country, leading to the closing down of the existing factories or workplaces, and redundancy for those workers. Thus, whereas the workers have more risks attached, once again transnational corporations are benefitting more from globalisation. Another incredibly important group that benefit from globalisation are consumers. Consumers are able to gain a wide variety of products, lower prices and increased choices. This is due to free trade, as countries are able to specialise in producing goods at a lower cost, which means lower prices for consumers.…

    • 945 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    A tax also forces the consumer to pay a higher price then they would have without the tax and the producer to sell less of a product then they would have without a tax on the product. Taxes also create deadweight loss where there is more demand than what is being produced. This means that without the presence of a tax that the market would supply what was being demanded rather than producing an amount below that because of the increasing marginal cost due to the tax. All in all free trade is good for the economy because it increases trade which is always mutually beneficial to both sides of the exchange. In addition to trade being mutually beneficial to both sides of the exchange increasing worldwide trade would help to decrease the opportunity for armed conflict to arise, as evident in Europe.…

    • 1492 Words
    • 6 Pages
    Great Essays
  • Improved Essays

    Free Trade Pros And Cons

    • 1923 Words
    • 8 Pages

    Having free trade agreements, governments do not need to pay subsidies, so they can save more money. With savings, countries can invest into various things, one being a foreign investment that can add more capital into that country. Since in free trade there is no “protection” countries are now able to become a global competition in the market (Amadeo). Free trade does not require countries to have already been trading partners in order for it to work, which opens up even more possibilities to create a vast amount of new trading partners (“Free…

    • 1923 Words
    • 8 Pages
    Improved Essays
  • Improved Essays

    That’s a more than 30-fold increase, during a period in which global population grew less than three-fold. Free trade aids places that lack certain resources that another countries can help provide. Globalization makes the process of free trade less tense because once world leaders realize how much a country is hurting; they can then extend their helping hand to those countries. Free Trade also assists more established country with receiving goods and services for a reasonable prices to sell to consumers. Globalization promotes economic growth which mean the world leaders want to create more jobs, and lower prices for consumers.…

    • 1091 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Another way of tackling the problems of monopoly is to remove the barriers, which prevents the growth of competition. New permits and licenses can be issued to potential producers. The formalities and administrative procedures can be made more flexible to encourage the entry of new firms. Moreover if a domestic monopoly is protected from foreign competition by existence of a tariff, which restricts imports, the government might reduce or remove this tariff. The government can also impose a lump sum tax (fixed tax, such a tax would not place unnecessary burden on the consumers and it has no effect on the monopolists’ price and output.…

    • 733 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    Arguments Of Free Trade

    • 1583 Words
    • 7 Pages

    The end of Soviet Unions was due to its collapse to access to new technology. It is obvious that not only free trade is responsible for growth. Many things such as political stability, macroeconomics and many other policies are also important and needed. On the other hand,if more nations trade with each other,the more advantages they can get from each other and help to grow.It leads to cooperation and peace among countries and it causes economical growth.”In fact ,one fascinating study from Stanford University proved that the more trading partners a nation has ,the less likely it is to go to war. (B.O`Brien)w.tradeready.ca Free trade is the way to limit aggression in international policy.…

    • 1583 Words
    • 7 Pages
    Improved Essays
  • Improved Essays

    This opportunity provides an increase from trade as local customers can buy less expensive imported commodities and manufacturers can send abroad products at higher overseas costs. Also, there is an increase from interest. The latest prices established in free business encourage industries to relocate production from goods that the closed financial system was generating at a moderately low-high price to commodities that it was creating at a somewhat low cost. Through making use of its comparative advantage in global trade, a country could enlarge the total amount produced and common…

    • 973 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    There are many benefits to this type of world system. First, it rewards efficient countries and punishes those who are not. No single state or world government determines where investments go, therefore money flows out of weak nations. In an ideal world, this encourages economies of scale, which creates an overall more efficient world market. Another benefit of globalization is the promotion of democracies and its ideas and people travel easily in countries that have freedoms.…

    • 1905 Words
    • 8 Pages
    Improved Essays