If you walk into a supermarket and can buy American SOAP or coffee and a fresh water bottle of gatorade. And you wonder how to buy without the influence of international trade?
International trade enables the international trading import export company sold items at the market of goods and services in other countries might not have. That’s why you can choose between a bottle of shampoo in Japan, France or America. that the results of international trade, the market contains many larger competitors and competitive price more than so. Facilitates customer may seek a cheaper product.
What is international trade?
International trade is the exchange of goods and services between the various countries together. This is the type of trade offers for rising to a world economy in which quantity, price, or supply and demand, influenced and affected by global events. Political change in Asia, for example, can lead to an increase in labor costs, thereby increasing the cost of production for a candy company in the United States, then will cause an increase in the price you have to pay to buy the cake box quality at your local supermarket. Rising labor costs, on the other hand, will lead to you paying less for a cake box or you eat each day.
Global business for the consumer and the country the opportunity to have access to the goods and services not available in their own countries. Almost all types of products can be found on the international market: food, clothing, spare parts, oils, jewelry, wine, stock, currency, and water. The service also traded: tourism, banking, transportation and consultancy. A product is sold worldwide as a password, and a product that is purchased from the global market is an import. Imports and exports are accounted for in the current account of the one country in the balance of payments.
Increase business efficiency worldwide international trade
Global trade allows rich countries to use their resources — whether or not capital, technology or labour – more effectively. Because the countries are endowed with different properties and the natural resources (land, labour, capital and technology), some countries can produce good breed much more efficient and therefore sell it cheaper than the in other countries. If a country can not effectively producing an item, it can be the entry by trade with other countries. This is called the specialization in international trade.
Let’s take a simple example. Countries X and Y gum producing countries, the tennis ball. Water X produced ten boxes of gum and eight barrels of tennis balls a week. While the country Y of production nine barrels of tennis balls and nine boxes of the gum a week. Both can produce a total of eighteen units. Country X, however, took four hours to produce the eight barrels of ball and five hours to produce ten boxes of candy (total is nine hours). The medical water, on the other, it takes three hours to produce nine boxes of the gum and four hours to produce nine barrel ball (for a total of seven hours).
But the two countries realize that they can produce more by focusing on the products they have comparative advantage. Then the water X began producing single gum, and water produced only medicine ball to tennis. Each country can create a specialized production of 25 units per year and the trade of equal proportions of both products. As such, each country now have access to 25 units of both products.
We can see then that for both countries, the opportunity cost of producing both products is greater than the cost. More specifically, for each country, the opportunity cost of producing 50 units for both products and tennis ball gum of both products (after the transaction). Specialization reduces their opportunity costs and thus maximize their efficiency in buying goods that they need. With the large supply, the price of each product will decrease, thus giving an advantage to the final consumer.
Note that in the above example, the country can produce medical chewing gum and the tennis ball is more effective than country X (because less completion time). This is called an absolute advantage, and country Y could have it because a high level of technology. However, according to the theory of international trade, even if a country has an absolute advantage over the other, it can still benefit from the expertise.
Other possible benefits of business worldwide international trade
International trade not only leads to increased efficiency but also allows the country to participate in the global economy, encouraging opportunities for direct foreign investment (FDI), which is the amount that the company invested in foreign companies and other assets. Under the facility, the economy can gain higher profit from its advantages, thus developing more efficient and more easily can become participants of economic competition.
The Government received, FDI as a means of Exchange and expertise could enter the country. The company asked the qualified human resources higher, better, to understand more deeply. So the company can achieve growth of gross domestic product and foreign. For FDI investors provided the company to expand and grow, which means higher revenues.
Great free trade protectionism international trade
As with the other institutions, there are opposing views. International trade there are two similarities regarding the level of controls placed on trade: free trade and protectionism. Free trade is the simplicity of two campuses: a laissez-faire approach, with no restrictions on trade. The main idea is that supply and demand factors, operating on a global scale, will ensure that production will happen in an effective manner. Therefore, nothing needs to be done to protect or promote trade and development, because market forces will do so automatically.
In contrast, the guardians kept regulations on international trade is very important to ensure that the market functions properly. This grassroots supporters believe the market inefficiencies that can hinder the benefits of international trade and they aim to guide the market accordingly. Protectionism exists in many different forms, but the most common is taxation, subsidies and quotas. These strategies attempt to remedy any inefficiency on the international market.
The bottom line
As it will open up opportunities for specialization and thus more efficient use of resources, international trade has the potential to increase a nation capable of producing and acquiring goods. Opponents of the global free trade has argued, however, that international trade is still allowed for inefficiencies to developing countries being violated. What is certain is that the global economy is in a State of constant change, and, as it evolves, so too must be all of its participants
Thank you for watching, you can find out more through the website: Aceworldtrading.com.