Internation Trade Debate
- Submitted by: mechadwick
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- Category: Politics: Economics
- Date Submitted: 07/10/2010 10:17 AM
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International Trade Debate Part I
Everyday people consume goods produced in foreign countries. A coffee made with beans grown in Brazil, a car assembled with parts which were manufactured in several foreign countries, are two examples of goods that people enjoy “because people trade with one another” (Mankiw, 2004, p. 45). Unrestricted international trade offers an exceptional advantage to people, as by trading, people can enjoy a greater quantity and variety of goods and services.
“Trade makes everyone better off because it allows people to specialize in those activities in which they have a comparative advantage” (Mankiw, 2004, p. 57). The principle of comparative advantage puts into perspective how unrestricted trades can be profitable for people as well as countries. Specifically, a trade between people who have different opportunity costs (refers to whatever people have to give up to get some goods) will be beneficial as people will obtain an item at a price which is lower than their opportunity cost of that item (Mankiw, 2004).
Adam Smith pointed out the advantage of unrestricted trades when he wrote “The Wealth of Nations”. He stated that if our country produces certain goods at lower cost than another country, and the other country produces a different good at lower cost, then the two countries should trade the goods in order gain from the trade (Suranovic, 2007). “The theory of comparative advantage also suggests that opening a country to free trade stimulates economic growth, which creates dynamic gains from trade” (Hill, 2002, ¶ 2).
In conclusion, unrestricted international trade is the way to go. Unrestricted international trade allows people to enjoy a greater quantity as well as a variety of goods and services. Further, unrestricted trade allows people to specialize in those activities in which they have a comparative advantage and stimulate economic growth to the point of creating gains from trade.
References
Hill, C....
Everyday people consume goods produced in foreign countries. A coffee made with beans grown in Brazil, a car assembled with parts which were manufactured in several foreign countries, are two examples of goods that people enjoy “because people trade with one another” (Mankiw, 2004, p. 45). Unrestricted international trade offers an exceptional advantage to people, as by trading, people can enjoy a greater quantity and variety of goods and services.
“Trade makes everyone better off because it allows people to specialize in those activities in which they have a comparative advantage” (Mankiw, 2004, p. 57). The principle of comparative advantage puts into perspective how unrestricted trades can be profitable for people as well as countries. Specifically, a trade between people who have different opportunity costs (refers to whatever people have to give up to get some goods) will be beneficial as people will obtain an item at a price which is lower than their opportunity cost of that item (Mankiw, 2004).
Adam Smith pointed out the advantage of unrestricted trades when he wrote “The Wealth of Nations”. He stated that if our country produces certain goods at lower cost than another country, and the other country produces a different good at lower cost, then the two countries should trade the goods in order gain from the trade (Suranovic, 2007). “The theory of comparative advantage also suggests that opening a country to free trade stimulates economic growth, which creates dynamic gains from trade” (Hill, 2002, ¶ 2).
In conclusion, unrestricted international trade is the way to go. Unrestricted international trade allows people to enjoy a greater quantity as well as a variety of goods and services. Further, unrestricted trade allows people to specialize in those activities in which they have a comparative advantage and stimulate economic growth to the point of creating gains from trade.
References
Hill, C....