Importance of international trade

The international trade stimulates the global economy. In addition, it contributes to promoting global employment, providing a greater variety of goods to countries and increasing the standard of living of societies

The problem that resolves international trade is the impossibility of self-sufficient countries. These cannot produce all the goods and services necessary for the functioning of the economy. In addition, international trade reduces the costs associated with bilateral negotiations between countries.

Likewise, globalization has facilitated the commercialization of goods and services, reducing border barriers. Based on international trade, a whole specialized merchandise transport system has been created. This allows virtually any product to be transferred to any destination.

Also, the international market increases the quality requirements of the products. In this way, consumers can access products with higher standards.

Other benefits of international trade

Also, other benefits offered by international trade and give importance to this activity are:

  • Access to the most important raw material markets: A fundamental supply of the production chain is raw materials. Without international trade, material markets would be smaller. For example, there are specific markets for the sale of oil or minerals.
  • Taking advantage of comparative advantage: International trade facilitates the specialization of industries. This implies that countries will produce the goods in which they are most efficient. With access to wider markets, specialization is promoted by the competition. For example, countries with higher grape production specialize in wine production. Similarly, among wine producers there will be some more or less competitive.
  • Greater variety of products:Commerce allows companies and people to access more products and services than are produced in their country of origin. This improves the cost structure of companies and the well-being of people because of their ability to choose. This is amplified by the specialized markets of international trade.
  • Development of economies of scale: The entry of companies into a larger market allows the economies of scale to develop. By accessing greater demand, the probability of placing surplus production not placed in the national market increases.
  • Growthand development : It is widely documented that international trade stimulates economic growth. Since it increases production, employment and improves economic diversification. It also increases the probability of achieving economic development. With the growth of industrialization and the possibility of improvement in people’s standard of living.

 

Leave a Comment