International trade is the exchange of goods, services, and capital between coun
ID: 374293 • Letter: I
Question
International trade is the exchange of goods, services, and capital between countries. International; trade has grown leaps and bounds in the past few decades with advancement in transportations, manufacturing, and liberalization of trade across the globe through agreements. Trade grew at an average annual rate of 10% in the last five decades and stood at a $32.27 trillion in 2015
International trade helps in increasing domestic competitiveness resulting in increased quality and variety of goods. There is an easy transfer of technology helping poor nations get access to advanced technologies. This helps business to spread their risks across markets and increasing sales and profits. Especially small scale industries have grown enormously in developing nations using international trade. International trade also reduces dependency on local markets, both for goods and services. It also helps to stabilize economic fluctuations in the domestic market. In countries like India, it has helped in reduction of poverty. Indian economy started booming after opening up its market for international trade through liberalization. Exports in such countries helped them to create numerous jobs and develop expertise in sectors like BPO.
International trade also has its ill effects like loss of jobs in the domestic market as jobs are being outsourced to countries with cheap labour. Both services and products manufacturing are outsourced. Also, countries with the agricultural based economy, as India started moving more towards such service sectors resulting in loss of agriculture industry. International trade suffers from political risks and cultural risks not to mention the risks created by exchange rate fluctuation
The economy of China in India both benefitted from international trade. Liberalization of policies and reduction of tariffs and globalization have helped in the boom of their economy. Labour-intensive manufacturing and services are being exported to such countries resulting in employment generation for millions. This changed the infrastructure as well as health and education sector in such countries. At the same time, international trade results in easy spreading of shocks in one part of the world to another the Japanese nuclear disaster at Fukushima disrupted the global supply chain and economy
Dollar prices are decreasing due to the growth of other countries' economies and the decrease in differential growth rate between the US and other countries. The exports have increased because of the decreasing dollar price. The rise in exports has led to decrease in trade. The US GDP has been performing well recently well because of the decreasing trade deficit
Explanation / Answer
What are the pros and cons of international trade and how does it affect the economy?? What are the pros and cons of international trade and how does it affect the economy??Related Questions
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