Advantages/Positive role/Arguments for international trade
- It encourages the exploitation and utilization of idle resources like land labour in the country through the vent for surplus theory. This is because the opening up of external market opens up the opportunity for the country to produce for export.
- It enables the country to earn foreign exchange from her exports. This foreign exchange is used for importation of capital and other manufactured goods from other countries which the country cannot produce.
- It promotes competition which leads to efficiency in production hence high quality products. This leads to more output and consumption at low prices hence improved standards of living.
- Market expansion. International trade widens the market for the countries product which leads to increased production hence economies of scale.
- Government revenue. It helps the government to earn revenue in form of export and import tariffs. Such revenue is used to construct social and economic infrastructure which is vital for economic development.
- It enables the countries to acquire a variety of commodities which they cannot produce locally. This improves and increases the choice of the people hence improved welfare.
- It helps the country to overcome shortages which can be caused by unforeseen circumstances for example drought, famine etc.
- It promotes specialization. Countries specialize in the production of commodities for which they have the resources and they can produce efficiently. This increases output of high quality hence economic growth and development.
- Creation of employment opportunities. This is as a result of increased resource exploitation, export and import activities, investments and market expansion resulting from international trade.
- Technology transfer. International trade promotes the movement of modem techniques, ideas, knowledge and skills especially to developing countries from developed countries. This promotes rapid economic growth and development.
- It encourages capital inflow from rich developed countries to poor countries in form of loans, grants, foreign capital investment. This leads to transformation of economies of developing countries.
- It promotes mutual understandings and diplomatic relations among countries. This enhances peace and economic stability among trading partners.
CATEGORIES Economics
TAGS Dr. Bbosa Science
