posted on: October 19, 2020
This is particularly evident in the attitude of Nigerians towards Made in Nigeria commodities such as shoes, clothes and food especially rice. 4 Key Steps to Adding an E-commerce Dimension to Your Business. This helps industrialisation of the country along with balanced growth. Your email address will not be published. International trade may adversely affect the consumption pattern of a country due to the import of cheaply manufactured and at times harmful commodities. Import which is cheaper than producing that. Costs of self sufficiency will be very high when compared to importing. There is no fear of monopoly and competition makes the producers keep the prices at a lower rate. Frederick List, therefore, put that: “Domestic trade is among us, international trade is between us and them.”. Disclaimer 9. The behaviour of international buyers in each case would, therefore, be different. Your email address will not be published. One notable thing about all of the aforementioned things is that they are imported into Nigeria. Other advantages of International trade include: Competition among nations leading to cheaper goods and services and better quality and innovation; also, availability of a wide variety of commodities; exchange of technological know-how etc. Factor endowments in different countries differ. (adsbygoogle = window.adsbygoogle || []).push({}); Advantages and Disadvantages of International Trade, 1. According to Investopedia, “This type of trade gives rise to a world economy in which prices, or supply and demand, affect and are affected by global events.” International trade like the domestic one has the seller and the buyer: the buying country imports goods and services while the selling country exports.
google_ad_client = "ca-pub-9755093768544960"; 3) International Political Influence: A political advantage of international trade is that it boosts the influence of a top player. Normally foreign goods are imported because of their relative cheapness in comparison with the prices of domestic goods. When countries tend to be interdependent, their economic independence is jeopardised. For instance, more than 80% of Nigeria’s revenue comes from the crude oil proceeds: thus, austerity measures had to be taken by the government during the 1980s oil glut to salvage the economy. Trade changes the quality of the people teaches them to consume new things also use old things in new ways, change in technical knowledge results in specialization etc. This reduces wastage of resources as countries make optimum use of its natural resources then. Advantages and Disadvantages of International Trade, 11 Criticisms to the Theory of Comparative Costs. For instance, Indians have right-hand drive cars, while Americans have left-hand driven cars. FTAs can force local industries to become more competitive and rely less on government subsidies. International trade facilitates the presence and usage of products and services which are otherwise unavailable in a country to that country. England was blocked by German submarines, which completely blocked the imports of goods and essential raw materials. Most of the minerals were exported to other countries. Thus for a developing country like Nigeria, foreign investment and expertise enter the country which invariably increase employment opportunities and the GDP. A high propensity to import may cause reduction in the domestic savings of a country. Human wants and countries’ resources do not totally coincide. Tariff policy, import quota system, subsidies and other controls adopted by governments interfere with the course of normal trade between one country and another. Clothes, shoes and other fashion accessories are often imported from Dubai; and we have Italian wine, Russian vodka and all sorts selling in Nigeria.
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If a country wants to sell its goods in the international market, it will have to produce more than what is needed to meet the domestic demand. These gains are in the form of more aggregate production, larger number of varieties and greater diversity of qualities of goods that become available for consumption in each country as a result of international trade. Similarly for Nigeria, the oil boom in the 1970s helped in no small measure the political image especially in Africa as Nigeria was able to actively participate in the frontline in issues such as the Apartheid, the independence of Angola and Namibia and in other matters relating to the African Union.
Cultural exchange and ties among different countries develop when they enter into mutual trading. International trade relations help in harmonising international political relations. With the help of international trade the surpluses of the country could be exported to the other country and the deficits of one country may be made up by imports. For all practical purposes, trade or exchange of goods between two or more countries is called “international” or “foreign” trade.
The behaviour of international buyers in each case would, therefore, be different. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of anyone else. Copyright 10. The government in each country is keen about the welfare of its own nationals against that of the people of other countries.
Thus there are numerous advantages arising from the exchange of goods between individuals living in different countries. The vast petrol reserves would have remained unexploited and Middle East Countries would have remained world’s poorest desert countries. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. often restrict the international mobility of labour. This is done when a country focuses on its natural resources and uses them maximally to produce more effectively and efficiently and abundantly for both domestic and international markets. All of these are the effects of International trade. It is also sometimes known as “inter-regional” or “foreign” trade. Some countries also have their own separate copyright and trademark protections that can be filed to protect companies selling products in their countries. Due to the operation of comparative costs, international trade leads to specialization and one sided economic development which is not conducive to the prosperity of the country. Foreign trade makes it possible to effect transfer of payments from debtor country to creditor country. During times of famine, scarcity and war, international trade enables the people of a country to maintain themselves through import of food, cloth and medicine from abroad. Thus, state interference causes different problems in international trade while the value of theory, in its pure form, which is laissez faire, cannot be applied in toto to the international trade theory. The advantages and disadvantages of free trade agreements affect jobs, business growth, and living standards: Key Takeaways. For example: for UK and Japan, it is impossible for them to feed, cloth and house their present population, without imports from other countries. Even clothes and shoes and food? Provides the foundation of international growth: International trade is the […] So countries which have a special advantage of one article can specialize in the production of that article and exchange it for another from another country which is eminently suited. Immigration laws, citizenship qualifications, etc., often restrict international mobility of labour. Subscribe to our mailing list and get interesting stuff and updates to your email inbox. Read more… Terms of Use. DISADVANTAGES OF INTERNATIONAL TRADE. Prohibited Content 3. 1. 2) Over-specialisation: Though as earlier discussed, specialization is good but when it is done without some form of diversification, the economy of a country might suffer. 1) Exploitation: Through international trade, the developed countries of the world often exploit the underdeveloped and developing ones both politically and economically. Internal trade is the exchange of domestic output within the political boundaries of a nation, while international trade is the trade between two or more nations. Sovereign remedy in times of war and famine, 13. International trade is trade that involves countries or between industries from different countries. Content Guidelines 2. It is to the advantage of each nation or region to specialize in the production of those goods for which their factor equipment is most suited. The socio-economic environment differs greatly among different nations. google_ad_height = 600; Chidi Obialor is an easy-going, smart and versatile law student who just loves to write! With the help of international trade, the countries are able to acquire commodities which they cannot produce locally due to the nonavailability of factors of production, insufficient quantity, and due to high costs of production. It allows countries to specialize in producing only those goods and services, which it is good at. The Meaning and Definition of Foreign Trade or International Trade – Explained!
Increase in the world’s prosperity and economic welfare of each trading nation. Local production may suffer Local industries may be overshadowed by their international competitors; Rich countries may influence political matters in other countries and gain control over weaker nations. Immigration laws, citizenship, qualifications, etc. International trade, on the other hand, is trade among different countries or trade across political frontiers. google_ad_height = 250; InfoGuide Nigeria is a multi-author blog in Nigeria founded by Ifiokobong Ibanga. Tariff policy, import quota system, subsidies and other controls adopted by a government interfere with the course of normal trade between it and other countries. 1) Efficiency: International trade increases the efficiency of countries through specialization.
Foreign trade discourages self-sufficiency and self-reliance in an economy. Europe and Africa could get tea and penicillin, respectively, only because of international trade. A wide variety of products can be traded in the international market as shown in the introduction: food, clothes, vehicles, spare parts, wine and what have you. Disadvantage of international trade. Report a Violation.
Economic and political policies differ from one country to another. Increase in the exchangeable value of possessions, means of enjoyment and wealth of each trading country. Under foreign trade, when a country tends to specialize in a few products, job opportunities available to people are curtailed. Important advantage is the division of labour and the consequent specialization. we respect your privacy and take protecting it seriously.
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