Gains from international trade, Microeconomics

Gains from International Trade:

It leads to increased total world production of goods and services. International trade based on comparative cost advantage allows countries to specialise in what they can do best. This allows for increase in output and Invariably increases in the volume of total world output.

• It leads to efficiency in use of world resources. International trade is based on specialization in what you can do best. This means each country involved in international trade uses the resources available to her in the most efficient way and hence world resources are efficiently used.

• It leads to availability of variety of goods and services. International trade makes citizens of nations to consume goods and services their resources cannot be used to produce.

• International trade leads to economies of scale. International trade leads to increased output and firms involved in producing for exports may enjoy cost reducing advantages that go with increased output.

• International trade brings about interdependence. This, politically, may help a nation to be conscious of the existence of other nations.The interdependence of nations helps promote good neighbourliness.

Posted Date: 1/3/2013 12:40:50 AM | Location : United States







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