Maybe you think it's safer to focus on trade on your home turf. This is one of the advantages of international trade that may be difficult to quantify and, therefore, easy to ignore. Total trade equals exports plus imports. It helps save the environment from harmful gases being leaked into the atmosphere and also provides countries with a better marketing power. If a country removes itself from an international trade agreement, or if a government imposes tariffs, it may produce an immediate local benefit in the form of … By making the size of the market large with large supplies and extensive demand international trade reduces trade fluctuations. According to Stanley (2011) “nations with strong international trade have become prosperous and have the power to control the world economy. Free trade is a way for countries to exchange goods and resources. This helps foreign businesses navigate the Philippine market. More exchange of technical know-how. If domestic industries cannot compete against foreign industries, the government willrestrict trade to help the domestic industries develop. Economists suggest, however, that policy solutions that impose … People trade because it will make them better off. The WTO projects that the agreement will lower international trade costs for member countries by an average of 14.3%, and increase international trade by up to $1 trillion. It can also help increase your company's credibility, both abroad and at home. Considering all these complex interrelations, it’s not surprising that economic theories predict that not everyone will benefit from international trade in the same way. Why might a government want to restrict trade? If you're not sure whether or not you're ready to partake in the advantages of international trade, you might want to check out the resources available for you at The International Trade Administration (ITA). Getting paid upfront may be one of the hidden advantages of international trade. International trade fosters peace, goodwill, and mutual understanding among nations. When countries produce through comparative advantage, wasteful duplication of resources is prevented. In an unprecedented global health crisis, trade is essential to save lives and livelihoods; and international co-operation is needed to keep trade flowing. This greatly benefits the consumers are they are now provided a wider range of options to choose from. Trade drives 46% of the $86 trillion global economy. Countries must balance the domestic benefits of free trade agreements with their consequences. It takes one U.S. worker to produce 1,000 refrigerators, but it takes four Mexican workers to do so. Benefits of International Trade The benefits of international trade can be depicted on the countries that have developed their income and those who have obtained trade power over the years. This alone could be one of the most valuable advantages of international trade. Enhanced reputation. This gives consumers a wider array of choices which will not only improve their quality of life but as a whole it will help the country grow. These protectionist policies encourage prices to stay high and help domestic industries to develop. For example, when the U.S. dollar is down, you may be able to export more as foreign customers benefit from the favorable currency exchange rate. Now it's true, I'm a philosophical anti-statist and so I oppose the very existence of the US federal government, but beyond that there are very practical reasons for being a free trader. This occurs in two ways. TOS 7. Efficient allocation of resources is a result of such exchanges. One country can profit greatly from it by exporting, but not importing, goods and services. © 2020 American Express Company. It can also be used to undercut domestic markets by offering cheaper, but equally valuable goods. Saturday, 12 June 2010 06:28 International trade, especially trade between advanced countries and poorer developing countries, has brought immense benefits to all participating countries. Benefits of globalisation. One of the advantages of international trade is that you may have an outlet to dispose of surplus goods that you're unable to sell in your home market. Nations with strong international trade have become prosperous and have the power to control the world economy. Another one of the advantages of international trade is that you may be able to leverage export financing. International trade helps generate more employment through the establishment of newer industries to cater to the demands of various countries. Therefore an incentive to produce efficiently arises. 1. The Export-Import Bank of the United States (EXIM) and The U.S. Small Business Administration may be places to explore for export financing options. Disclaimer 9. Your company's profits from Japan will be in yen. 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