What Is International Trade?
If you walk into a supermarket and are able to buy South American bananas, Brazilian coffee and a bottle of South African wine, you are experiencing the effects of international trade.
International trade allows us to expand our markets for both goods and rvices that otherwi may not have been available to us. It is the reason why you can pick between a Japane, German and American car. As a result of international trade, the market contains greater competition and therefore more competitive prices, which bring a cheaper product home to the consumer.
What Is International Trade?
carusoInternational trade is the exchange of goods and rvices between countries. This type of tr
ade gives ri to a world economy, in which prices, or supplynotafraid and demand, affect and are affected by global events. Political change in Asia, for example, could result in an increa in the cost of labor, thereby increasing the manufacturing costs for an American sneaker company bad in Malaysia, which would then result in an increa in the price that you have to pay to buy the tennis shoes at your local mall. A decrea in the cost of labor, on the other hand, would result in you having to pay less for your new shoes.remote nsing
Trading globally gives consumers and countries the opportunity to be expod to goods and rvices not available in their own countries. Almost every kind of product can be found on the international market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies and water. Services are also traded: tourism, banking, consulting and transportation. A product that is sold to the global market is an export, and a product that is bought from the global market is an import. Imports and exports are accounted for in a country's current account in the balance of payments. (For more on this, e the articlesbitch的意思 What Is The Balance Of Payments? 神探夏洛克字幕andUnderstanding The Current Account In The Balance Of Payments.)
迪士尼英语下载Incread Efficiency of Trading Globally
Global trade allows wealthy countries to u their resources - whether labor, technology or capital - more efficiently. Becau countries are endowed with different asts and natural resources (land, labor, capital and technology), some countries may produce the same good more efficiently and therefore ll it more cheaply than other countries. If a country cannot efficiently produce an item, it can obtain the item by trading with another country that can. This is known as specialization in international trade.
Let's take a simple example. Country A and Country B both produce cotton sweaters and wine. Country A produces 10 sweaters and six bottles of wine a year while Country B produces six sweaters and 10 bottles of wine a year. Both can produce a total of 16 units. Country A, however, takes three hours to produce the 10 sweaters and two hours to produce the six bottles of wine (total of five hours). Country B, on the other hand, takes one hour to produce 10 sweaters and three hours to produce six bottles of wine (total of four hours).
But the two countries realize that they could produce more by focusing on tho products with which they have a comparative advantage. Country A then begins to produce only wine and Country B produces only cotton sweaters. Each country can now create a specialized output of 20 units per year and trade equal proportions of both products. As such, each country now has access to 20 units of both products.localrvice
We can e then that for both countries, thecampus是什么意思 opportunity cost of producing both products is greater than the cost of specializing. More specifically, for each country, the opportunity cost of producing 16 units of both sweaters and wine is 20 units of both products (after trading). Specialization reduces their opportunity cost and therefore maximizes their efficiency in acquiring the goods they need. With the greater supply, the price of each product would decrea, thus giving an advantage to the end consumer as well.
Note that, in the example above, Country B could produce both wine and cotton more efficiently than Country A (less time). This is called an absolute advantage, and Country B may have it becau of a higher level of technology. However, according to international t
rade theory, even if a country has an absolute advantage over another, it can still benefit from specialization. (For a review of some of the economic concepts, e the Economics Basics tutorial.)
Other Possible Benefits of Trading Globallykellerman
International trade not only results in incread efficiency but also allows countries to participate in a global economy, encouraging the opportunity ofcomputer是什么意思 foreign direct investment (FDI), which is the amount of money that individuals invest into foreign companies and other asts. In theory, economies can therefore grow more efficiently and can more easily become competitive economic participants.
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For the receiving government, FDI is a means by which foreign currency and experti can enter the country. The rai employment levels and, theoretically, lead to a growth i
n the gross domestic product. For the investor, FDI offers company expansion and growth, which means higher revenues.
