The Advandtage and Disadvantage of International Traed
The advantages and disadvantages of International Trade
Introduction
International trade is important to a country with another country. It refers to a country’s economic, social and political. International trade is the economic interactions between different nations in the exchange of goods and services by importing and exporting. Why do modern countries trade with one another? There are some reasons that countries involve in international trading. For example, some countries lack of raw materials like timber, rubber, oil and petroleum. To gather these materials, countries must trade with other countries in order to get what they want. For example, a country which lacks of timbers, its citizens would unable to produce furniture or related products. By involving itself in international trade, its citizens can get timber to produce. In return, the country pays the foreign suppliers money as a medium of exchange. In most countries, international trade represents a significant of gross domestic product (GDP). International trade allows countries to exchange goods and services with the use of money as a medium of exchange. International trade has advantages and disadvantages to a country. International trade helps countries to share their prosperity and technical know-how in order to sell their surplus items mutually.
1.1 Advantages of International Trade
1.1.1 Increase of Total World Production
The first advantage is absolute advantage and comparative advantage can help a country to increase its outputs through specialization. As a result it will increase the total world production. Absolute advantage occurs when one country can produce more of one product compared to other country with using the same of resources. Comparative advantage states that countries can benefit through specialization and trade the production with each other to lower the opportunity cost. For example, Malaysia and Indonesia are the countries which export timbers and rubbers. However,
Introduction
International trade is important to a country with another country. It refers to a country’s economic, social and political. International trade is the economic interactions between different nations in the exchange of goods and services by importing and exporting. Why do modern countries trade with one another? There are some reasons that countries involve in international trading. For example, some countries lack of raw materials like timber, rubber, oil and petroleum. To gather these materials, countries must trade with other countries in order to get what they want. For example, a country which lacks of timbers, its citizens would unable to produce furniture or related products. By involving itself in international trade, its citizens can get timber to produce. In return, the country pays the foreign suppliers money as a medium of exchange. In most countries, international trade represents a significant of gross domestic product (GDP). International trade allows countries to exchange goods and services with the use of money as a medium of exchange. International trade has advantages and disadvantages to a country. International trade helps countries to share their prosperity and technical know-how in order to sell their surplus items mutually.
1.1 Advantages of International Trade
1.1.1 Increase of Total World Production
The first advantage is absolute advantage and comparative advantage can help a country to increase its outputs through specialization. As a result it will increase the total world production. Absolute advantage occurs when one country can produce more of one product compared to other country with using the same of resources. Comparative advantage states that countries can benefit through specialization and trade the production with each other to lower the opportunity cost. For example, Malaysia and Indonesia are the countries which export timbers and rubbers. However,