Trade Is A Powerful Weapon Essay

1210 Words Nov 21st, 2015 5 Pages
Trade is one of the most important strategies that a country could use in order to increase its economy and capital. One of the ten principles of economics states that “Trade can make everyone better off”, that means that a reciprocal interchange of goods and services is beneficiary for every country in the trading process. The main issue is finding the right product to trade, which is why each country have to make an analysis of their own economy to determine in which product they have a comparative advantage or absolute advantage.
Absolute advantage refers to the ability of a country to produce the bigger quantity of a product or service under any circumstance and comparative advantage refers to the capacity of a country to produce something at a lower opportunity cost. Taking those two factors in consideration is crucial to determine the kind of product, the amount of trade and the price of the interchange.
Trade is a powerful weapon, it allows every country to specialize in the ability they are better off and it facilitate the economic growth. It brings the possibility of an increase money income in countries with lower gross domestic product. Countries such as China, India and Brazil are among the main sources of trading between undeveloped countries and higher economies like Europe and the United States.
For example, if a country specializes in the production of computers and the production levels for that output are higher than the production of airplanes, the…

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