The international trade indicates the exchange of different capital goods across the international borders. This is a trade between two countries, which has given a massive rise to the world economy. However, there are positive and negative aspects regarding the international trade. Moreover, it depends on different organizations that how they enhance the positive aspects and eliminate the negative ones, which is the same of the study (Robinson, 2015).
“The international trade enables the countries to exchange different goods to meet the needs of the customers in both countries. However, the advantage and disadvantages vary with the passage of time, which needs to be considered by the countries to make the trade successful”
Advantages of International Trade
To meet the demand in different countries through trade, the concept of the economic gain is in the limelight around the globe. The government of different countries tries to enhance the trade with other countries in order to sell and purchase product. It gives rise to the economy, as countries can gain mutual benefits for a long run. This is a big advantage of international trade (Osmond Vitez, 2014). The comparative advantage concept comes into the life, as the countries gain comparative advantage through the international trade. For example, NAFTA enhances free trade agreements among different countries to meet the demands of the customers (Chang, 2007).
The advantages of international trade suit many countries. The best example, in this case, is, for instance, there is an abundance of labor available in the developing and underdeveloped countries. In these countries, the labor is cheap as well. This will not only help the developed countries to get their work done by lowering the labor cost and they will be assisting the developing countries in getting the fair share in research and development by providing them skills and expertise. For instance, Apple has started the manufacturing unit in Vietnam and China in order to reduce the production costs and deliver the value to the customers (Osmond Vitez, 2014).
To make the trade successful, the countries must keep different theories in the limelight. Another theory exists regarding the international trade. This theory is absolute comparative advantage. Sometimes, a particular company produces two products against the single products to be imported from other country. For example, a company produces 5 textile products and 15 rice products. On the other hand, other country produces 10 textile and 20 rice products, which illustrates the ratio of 1:3 and 1:2 respectively. The production of these products can be very difficult for such countries because of high costs and international trade allows them to use these products (Chang, 2007).
The advantage of international trade is related with exports and imports. For example, The US imports the spare parts and components of the vehicles and it is the largest contributor being 7.1% (OEC, 2016) towards the country’s imports after crude oil. The countries started to make the production capacity integrate with the needs or wants of the consumptions patterns for both the domestic consumers along with the foreign consumers as well. This is a great advantage of the international trade (Chang, 2007).
Disadvantages of International Trade
Relative to the trade disadvantages, interestingly the government must have to meet the needs in the country. For example, to protect the new and developing industry, a country may exchange the impaired goods to other company in low rates. In result, low quality goods lead towards the dissatisfaction. This is an infant industry concept that exists in the international trade. The downside of the international trade is an impediment to the development and growth of the local small industries as it puts hurdles in the way of the domestic production. The local industries are not capable enough to produce high-quality goods. Therefore, there is a need to kep reviweing the cost considerations (Robinson, 2015).
end, this is to conclude that international trade has to be sustained among
different countries despite having the immense disadvantage. The most important
thing is to navigate some strategic considerations to enhance the mutual benefits
to have successful trade. To meet the demand of the customers, there is a need
to implement the international trade standards, illustrated by the NAFTA to
sustain the success for a long run. In the competitive global market, the
countries have to develop different alternatives to eliminate the disadvantages
or barriers to make the difference.
Chang, H.-J. (2007). BAD SAMARITANS: the Myth of Free Trade and the secrot history of Capitalism. Bloomsbury Press.
OEC. (2016). US Imports. Retrieved October 7, 2016, from OEC: http://atlas.media.mit.edu/en/profile/country/usa/#Imports
Osmond Vitez. (2014). The Benefits of Free Trade for Developing Countries. Retrieved october 10, 2015, from http://smallbusiness.chron.com/benefits-trade-developing-countries-3834.html
Robinson, N. (2015, may 27). Disadvantages of Free Trade Agreements. Retrieved october 10, 2015, from http://www.ehow.com/list_6113059_disadvantages-trade-agreements.html