What are the benefits of International Trade?

While shopping in a supermarket, have you ever come across products labelled as made in China or made in India? If yes, then those are the by-products of international trade. Being manufactured and processed in one country, these products are exported to other countries for money.

Perhaps, we all are familiar with the above-mentioned concept and functioning of international trade. But, have you ever wondered beyond the monetary gains, what else does this trade offers to a country? No?

Well, there’s not just one but plenty of benefits that international trade brings into a country.

Thinking what these benefits are? Let’s have a look at our list!

Increased employment: Be it an exporter country or an importer country, international trade fosters a variety of technical and non-technical jobs for individuals. Such job generation stimulated by international trade helps countries to relatively reduce their unemployment levels.

Solves inequitable resource distribution: With the exchange of goods and services from surplus to deficit areas, it becomes easier for countries to tackle the issues of inequitable resource distribution. Additionally, such deal proves profitable for countries with surplus resources as they can productively channelize their resources to earn money from it.

Economies of Scale:  Broadening horizons of international trade enable exporter countries to increase their output at decreased production costs. Thus, through efficient handling of international trade, an exporter country can simply reap in the profits experienced due to economies of scale.

Improved production quality: To compete with other countries, exporter countries are bound to manufacture good quality of goods. Improved production quality ultimately results in increased exports which fosters a steady inflow of foreign currency within the country. 

Regulating demand and supply: Efficient exchange of goods helps the countries to regulate demand and supply within the global markets. A regulated demand and supply work in to avoid trade fluctuations which have the potential to hamper the global markets.

Fosters World Peace: Often economies who are interdependent, develop a bond of mutual trust and respect. Such bond strengthens international relations and contributes to the nurturing of world peace. As a result, interdependent economies are less likely to go on a war against each other. 

Economic Development: The decreased unemployment, increased in-flow of foreign currency, improved GDP, efficient production and potential of foreign direct investments brought from international trade culminate into a country’s economic development.

Good International Relations: The to and fro movement of goods between countries lead to the development of good international relations. In some scenarios, countries enter into a free trade agreement which helps them to enjoy the withdrawal of tariffs and other trade restrictions.

With these insights on benefits, we hope by now you have realized that the benefits of international trade are not just restricted to the financial sphere.

On a wider spectrum, this trade is responsible for facilitating an all-round development of the entire countries.

Source: General News Blog