8 Benefits of International Trade | Export Management
The benefits that can be identified with Reference to International Trade are as follows:
International trade allows countries to exchange good and services with the use of money as a medium of exchange. The benefits of international trade have been the major drivers of growth for the last half of the 20th century.
Nations with strong international trade have become prosperous and have the power to control the world economy. The global trade can become one of the major contributors to the reduction of poverty.
Several benefits that can be identified with reference to international trade are as follows:
1) Greater Variety of Goods Available for Consumption:
International trade brings in different varieties of a particular product from different destinations. This gives consumers a wider array of choices which will not only improve their quality of life but as a whole it will help the country grow.
2) Efficient Allocation and Better Utilization of Resources:
Efficient allocation and better utilization of resources since countries tend to produce goods in which they have a comparative advantage. When countries produce through comparative advantage, wasteful duplication of resources is prevented. It helps save the environment from harmful gases being leaked into the atmosphere and also provides countries with a better marketing power.
3) Promotes Efficiency in Production:
International trade promotes efficiency in production as countries will try to adopt better methods of production to keep costs down in order to remain competitive. Countries that can produce a product at me lowest possible cost will be able to gain larger share in the market.
Therefore an incentive to produce efficiently arises. This will help to increase the standards of the product and consumers will have a good quality product to consume.
4) More Employment:
More employment could be generated as the market for the countries’ goods widens through trade. International trade helps generate more employment through the establishment of newer industries to cater to the demands of various countries. This will help countries to bring-down their unemployment rates.
5) Consumption at Cheaper Cost:
International trade enables a country to consume things which either cannot be produced within its borders or production may cost very high. Therefore it becomes cost cheaper to import from other countries through foreign trade.
6) Reduces Trade Fluctuations:
By making the size of the market large with large supplies and extensive demand international trade reduces trade fluctuations. The prices of goods tend to remain more stable.
7) Utilization of Surplus Produce:
International trade enables different countries to sell their surplus products to other countries and earn foreign exchange.
8) Fosters Peace and Goodwill:
International trade fosters peace, goodwill, and mutual understanding among nations. Economic interdependence of countries often leads to close cultural relationship and thus avoid war between them.
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