Respuesta :
The practice of products and services traded among countries around the world is knows as international trade
What is international trade?
Exchange of capital, goods, and services across international territories because of demand of goods or services in that territory is known as international trade.
What are benefits of international trade?
COMPARATIVE ADVANTAGE- It allows countries to specialize in producing only those goods and services, which it is good at. ECONOMIES OF SCALE -If a country wants to sell its goods in the international market, it will have to produce more than what is needed to meet the domestic demand. So, producing higher volume leads to economies of scale, meaning the cost of producing each item is reduced. COMPETITION- Selling goods and services in the foreign market also boosts the competition in that market. In a way, it is good for local suppliers and consumers as well. Suppliers will have to ensure that their prices and quality is competitive enough to meet the international competition.
What are demerits of international trade?
UNFAIR TO NEW COMPANIES -New companies or start-ups who don’t have much resources and experience may find it difficult to compete against the big foreign firms. A THREAT TO NATIONAL SECURITY- If a country is over dependent on the imports for strategic industries, then exporters may force it to take a decision that may not be in the national interest. PRESSURE ON NATURAL RESOURCES- A country only has limited natural resources. But, if it opens its doors to the foreign companies, it could drain those natural resources much quick.
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