International Trade: Positives and Negatives
International trade is the exchange of products and services for money between two or more countries. It is a method that has done well throughout the years due to the benefits it delivers to the economy of many countries. As a result, it contributes for a significant amount of most countries' Gross Domestic Product. Nonetheless, there are some drawbacks to international trading. This essay will be focused on the thesis statement: This essay will be a study of both the positives and disadvantages of international trade. International trade has both positive and negative aspects.
Positive Aspects of International Trade
Through employment, exports create jobs in the country. Most firms that export products are expanding as the global market thrives. This has led to more job creation which improves the living standards of the citizens. As the domestic companies gain more experience of producing for the global market, they tend to acquire new skills that fit the international standards, which leads to more job openings, (Bernard et al, 23). The more the employees involve themselves in producing for the global market, the more they become better equipped for the work, through the learning curve. This improves the production and efficiency of the firms, making it possible for them to produce more value with fewer resources, hence earning an absolute advantage. Imports create jobs abroad as exports create jobs at home. In most cases, the jobs created through exports leads to increase the net gain, hence leading to economic growth. The fact that people can provide for their needs through the jobs that are created makes it possible for countries to eliminate poverty. In most developed countries such as China, international trademarks the largest contributor in job creation. International trade has led to an extension of the benefits of division of labor and specialization. Countries tend to specialize in what they are good at, especially in the agricultural sector. Just as specialization makes employees more productive, it also leads to an improvement in the country's economic, (Kokko 25).
Reduction of Prices for Consumers
International trade leads availability of a variety of products in a country. The provision of a range of products gives the customers a chance to choose according to both quality and price. Most countries take advantage of the comparative advantage, hence being able to sell their exports at a lower price than their competitors. This favors the consumers since they can be able to get the products at lower prices. The Foreign competition also leads to the creation of international rules regarding consumer exploitation. These rules ensure that the products are sold at the right market prices. As a way of trying to get more sales, countries reduce the prices of their products, therefore providing them at a lower cost than their competitors.
International trade has also led to more utilization of the natural resources. This makes it possible for countries to import raw materials, finished products and work in progress for the sake of assembling. This has made it possible for countries which have skilled workforce but lacks raw materials to be able to produce. This makes the international trade to be characterized with many sellers, hence increasing competition. This leaves the competitors with the choice of reducing the prices, as a way of attracting more customers.
Disadvantages of International Trade
Job Outsourcing
The only way in which countries support international trade is through reduction of tariffs to make it easier for exportation and importation of products. This makes it easy for citizens to live and work in other countries, hence leading to job outsourcing. This can lead to a brain drain in most developing countries since most citizens may opt to work for better pays in the developed countries, (Mundell, 95). A reduction of trade tariffs makes it possible for countries to trade freely hence increasing competition. As a way of trying to achieve lower production coats to sell products at a lower price compared to the competitors, some countries venture into a compromise on quality. Once defective products which are of low quality are produced, consumers are exploited.
Reduced Profits for Local Farmers
Most developed countries subsidize their agribusiness, making it possible for their agricultural exports to be of lower prices. This leads to more agricultural exports from developed countries when compared with the developing countries which are not likely to afford subsidization. This has pushed most developing countries out of the agribusiness leading to high opportunity costs for farmers in developing countries. This is because they fail to engage in international trade which has the potential to make them more money but only engage in local trade. This reduces the net income of the countries, (Shany, 26).
Conclusion
Just like most types of trade, international trade has both advantages and disadvantages. However, the effect of its benefits on the economy is more than the effect of its disadvantages. This essay, therefore, concludes that, although international trade has its cons, its pros are much beneficial and should, therefore, be practiced.
Work Cited
Bernard, Andrew B., et al. "Plants and productivity in international trade."The American
Economic Review 93.4 (2003): 1268-1290.
Kokko, Ari. "Markusen, JR: Multinational Firms and the Theory of International Trade." (2004):
284-287.
Mundell, Robert A. "International trade and factor mobility." the american economic review 47.3
(2009): 321-335.
Shany, Yuval. "Assessing the effectiveness of international courts: A goal-based
approach." American Journal of International Law 106.2 (2012): 225-270.
