Disadvantages Of International Trade

801 WordsSep 30, 20174 Pages
International trade is defined as “the exchange of goods, services and capital across national borders, between two or more countries.” International trade is an important part of the economy because it allows every country to specialize in whatever they are the best at, evaluated using comparative advantage. The country with a comparative advantage in making a good or service should specialize in making that good or service. International trade has changed drastically over the past one hundred years due to advanced technology in communication and transportation. Faster communication and transportation results in faster trade, resulting in more powerful economies. Trade allows countries to do what they do best, resulting in an economy with…show more content…
International trade helps banana consumers and hurts American producers, but because there are not many American banana producers, the advantages to consumers outweigh the disadvantages to producers. Another benefit of trade is the enhanced flow of ideas. This is best exhibited in the tech industry. Apple, Microsoft, Facebook, Tesla, and many other companies employ engineers from other countries. The engineers bring their training and ideas from their homelands to the United States, enhancing the goods these companies produce in the name of economic efficiency. This results in more diverse companies that have better ideas and better performance because more diverse groups often outperform their homogeneous counterparts. The engineers can also send money home, helping their families move to the United States and increasing the purchasing power of their families back home. The enhanced flow of ideas also goes back to their countries, as the international engineers may bring back techniques learned in the United States to enhance goods in their homelands. Unemployment (loss of domestic jobs) is a disadvantage of trade. Sometimes, the loss of domestic jobs is outweighed by the save to the consumer. In the 1970s, the Japanese car imports caused US automakers to innovate their cars with better gas mileage and quality. This forced innovation, and better products.
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