Benefits of trade

The biggest benefit in trade is that it allows the country to allocate their resources efficiently. Moreover, it increases competition in market for that good since there is an increase in suppliers for the that good. Trading benefits both countries as one countries abundant factors of endowment with other countries that lacks in the same good creates not only a healthy relationship between the two country but allows each country to save time. Thus this puts pressure on each countries production to be innovative and forces them to continually improve their product, hence they much perform a high level to continue trade globally.

Furthermore, since countries trade goods they are specialized in with rich in natural resources,they will continue in producing quality goods. Thus, it becomes an incentive for the workers to continue to work hard since the wages are stable.

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~ by scioneconblog on September 28, 2009.

2 Responses to “Benefits of trade”

  1. That doesn’t sound too good. My cars actually a Toyota so this concerns me quite a bit. Although I hope that Toyota can fix this and give the Japanese economy and extra little boost

  2. Well done Scion good to see you following the news. What diagram could you use to illustrate your answer.

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