The Economic Argument For Trade

1468 WordsOct 8, 20156 Pages
What is the economic argument for trade? Trade is generally known as the buying and selling of goods from one person to another, “international trade would involve at minimum two countries and can go up to however many want to participate in the trade”1 and have something to offer that the there corresponding countries are willing to accept. Trade involves a lot of protection backed by the governments of the countries trading; hence, there are a number of common arguments in favor of protection. These may help certain groups within a country, or even may help a nation achieve some overall goal entirely. When it comes to trade there are numerous arguments put forward, some of which I will be discussing in this paper such as government revenue, national defense, balance of payment and so on. The first economic argument for trade would be government revenue. Export taxes, tariff, and quotas, are generally used to generate government revenue. Moreover, trade taxes are usually attractive as these trade taxes are very easy to collect, also, in terms of focusing on developing countries, there wouldn’t be much income to tax upon. Another benefit of trade taxes would be that “larger countries could pass some of their tax burdens to their trading associates”2. However, in the long term, income or consumption taxes may be wiser choices. The second argument for trade would be national defense. In some countries there might be the possibility of having industries that are dynamic to
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