Question

List out the advantages of international trade

Answer 1

1. Geographical Specialization: Countries across the world differ significantly in terms of natural resources, capital equipment, manpower, technology and land and so on.

2. Optimum use of Natural Resources: International business operates on a simple principle that a country which can produce more efficiently and trade the surplus production with other countries has to procure what it cannot produce more efficiently.

3. Economic Development: International business helps the developing countries greatly in achieving rapid economic development by importing machinery, equipment, technology, talent, and so on.

4. Generation of Employment: International business generates employment opportunities by assisting the expansion and growth of agricultural and industrial activities.

5. Higher Standard of Living: On account of international business, the citizens of the country can buy more varieties of goods and services which cannot be produced cost-effectively within the home country.

6. Price Equilisation: International business helps to stabilize the prices of various commodities which are fluctuating on a daily basis in the world market.

7. Prospects for Higher Profit: International business helps the firms which produce goods in excess to sell them at relatively higher price to various countries in the international market.

8. Capacity Utilisation: International business enables the firms across the country to sell their goods and services on a large scale in the international market.

9. International Peace: International business makes countries across the world become interdependent while these countries are independent in their functioning.