As The World’S 3Rd Largest Economy, India Is An Important

There is no doubt that increasing in international trade is supporting the economic growth across the world, raising incomes and creating jobs. However, international trade can also some create economic obstacles, such as the international context and the market policy and regulations of each country, and consequently it can be said that the effects would have positive and negative sides, and it is useful to mention all of them and to take them into consideration.

The United States has an absolute advantage over the technological products and services which are critical. Within the global markets, the U.S has been able to provide tech products and services appropriately. However, it has comparative advantage of offering tech services while the absolute advantage exists in technology design and providing industrial capacity. The U.S is a major exporter in the international markets of products such as civilian aircraft, semiconductors, cars, car accessories, fuel oil, and organic chemicals among others. Such exports improve the U.S's comparative and absolute advantage.

Trading is very important economic factor. Trade between different countries depends upon different factors. There are some factors due to which bilateral trade between two states is enhanced. On contrary, there are some factors which restrict or reduce the trade between two countries (Meyer, 2011). Factors which enhance trade include different cultural, political, geographic and economic aspects which are common between the 2 countries involved in bilateral trade with each other. While trade is reduced or restricted, if two countries are completely different culturally, politically, geographically and economically (Siegel, 2011). For example, trade between two countries, having common boarder, currency, per capita income et cetera, will be lot more high than those countries which do not share these factors common with each

Together China and India attributed to prosperity and there are mutual economic benefits. Both countries have formed stronger economic bonds. They have openly cooperated with one another in multi-lateral trade negotiations. As emerging economies continue to grow, there may be a further decline in the share of world output and world exports accounted for by the

Nations trade with one another because it is mutually advantageous for both parties when one is more efficient at producing a certain good and at a lower cost, and the other is proficient at producing a different good or service more efficiently. This is based on Ricaro’s theory of comparative advantage.

As stated in an article from “International Trade Administration,” the high demand for exports from the United States has increased the amount of jobs available. Roughly “6 million jobs were created in 2006” (Ward, 2009) because other countries had a high requests for exports from the U.S. Some countries do not have the supplies or resources to create goods and services that they need. They rely on the U.S. to create what they can’t and buy them. The United States also has the ability and resources to create products faster then other countries.

The term competitiveness defines the ability of a region to export more than its imports while including all “terms of trade” to reflect government legislation and import barriers. In other words, according to the world competitiveness report, competitiveness is “… the ability to design, produce, and market goods and services, the price and non- price characteristics of which form a more attractive package than those of competitors.” (Pg3.) Each nation has different competitiveness level, which relies on multitude factors such as; raw materials, innovative technologies, energy prices, the type of economy, legislations, and the exchange rate fluctuations. Nevertheless, the prosperity of countries depends on the nation’s competitiveness status.

However, it was apparent to economists that nations with similar resource endowments exchanged similar products with each other. Economists felt that trade explained solely by comparative advantage was an incomplete analysis of international trade. Furthermore, since the classical trade theory was unable to explain intraindustry trade, economists decided to expand on the classical trade theory by creating a new theory of trade (Carbaugh, 2011). The new theory states that economies of scale provide incentive for a country to specialize in a particular product (Carbaugh, 2011). Furthermore, based on economies of scale, nations with similar factor endowments will trade with each other as sometimes it is beneficial (Carbaugh, 2011). Arguments stemming from this new trade theory puts the economic case for free trade in doubt.

Economy: An expanding international commitment to free trade among countries has internationalized the market for goods; people have access to goods that were previously out of reach. Finally, in addition to the exchange of goods across borders, traders move billions of dollars daily with the click of a mouse. Some countries have been helped by the newly emerging economic order because they have the resources to expand production worldwide and to create goods that are in demand internationally. On the other hand, some countries and individuals have been hurt because they are not able to compete with the strongest producers internationally. The United States is one of the world's leading exporters and maintains a lead in many of the future's most promising industries, including biotechnology, space technology, and computer software. U.S. corporations have sought a competitive edge by taking advantage of cheap labor in Latin America and Asia.

The country can maximize their wealth by putting the resources in the most competitive industries. Government created comparative advantage rather than free trade because now easier moves the production processes and the machines into countries that can produce more goods (Yeager & Tuereck, 1984). However, many countries now move to new trade theory suggests the ability firms to limit the number of competitors associated with economic scale (reduction of costs with a large scale of output) (Krugman, 1992). The comparative advantage occurs when two-way trade in identical products, it will useful where economic scale is important, but it will create problem with this model. As a result, government must intervene in international trade for protection to domestic firms (Krugman, 1990)

Trade freedom is a highly important factor in determining economic freedom and wealth. No one single country has the resources required to sustain the current standards of living in developed or developing nations. Trade requires specialization according to a country’s comparative advantage. Specialization allows the most efficient and effective use of a country’s scarce resources, whether that be natural resources or labor resources. The Index shows the economic benefits of specialization and trade.

The theory of comparative advantage explains the benefit of free trade. According to this theory by David Ricardo in the early 19th century, “Both countries will be better off if each specializes in the industry where it has a comparative advantage, and if the two trade with one another.” (Citation) International trade opens up markets to foreign supplier, and domestic companies need to improve their efficiency, boost productivity, and lower cost to increase competitiveness instead of enjoying monopolies or oligopolies that enabled them to keep prices well above marginal costs. On the other hand, international trade also offers domestic companies bigger demands and broader markets; therefore more jobs relevant to export have been created. Furthermore, jobs in the US supported by goods exports pay 13-18 percent more than the US national average (ustr.gov).

Certainly, trade liberalization generates competitiveness and transfers technology that directs to productivity growth. Consequently, it was thought that quota elimination would have led to changes in export structures of textile and clothing sector of Pakistan through comparative advantage Nawaz and Rukhsana (2013) . The objective of the study is to distinguish the competitiveness of Pakistan’s external sector of Pakistan over the period 2003 to 2015 with the global market and various selected Asian countries. This study examines comparative advantage of Pakistan’s external sector through revealed comparative advantage (RCA) Balasa index (1965) at Harmonized System (HS 2-digits, 1988/92) aggregative level. The Present study goal is to provide a qualified position of leading sectors such as textile and clothing sector of Pakistan in the foreign markets and with major trading partners. Despite, export demand and export supply play a significant role in changing export shapes through comparative advantage. Theoretically, comparative advantage occurs from factor endowments and from differences in technology (Ruffin, 1988)

The new trade theory began to emerge in the 1970s when a number of economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade (Wickramasekera, Cronk & Hill 2013). This theory is based on two major concepts that are economies of scale and first-mover advantage. To elaborate:

According to the Mercantilism theory, In India Export is more than Import and it is maintaining trade surplus but however when considering zero-sum game which stats that one country will gain results another country will lose