In this assignment, you will discuss the importance of trade in the world and ho
ID: 1169160 • Letter: I
Question
In this assignment, you will discuss the importance of trade in the world and how this has changed over the past decades. The text outlines the five main reasons for international trade. Using the Internet and the library, provide a specific example illustrating each reason including:
The countries involved
The product or service
An explanation of how the reason was the driving force
An explanation of how trade in the good or service may have changed over time
An evaluation of the sustainability of the trading pattern
Be sure to include a reference for every example.
Explanation / Answer
Five reasons for international trade is explained below-
Different Technology-
A country can be more profitable in business if they have different unique features in their technological abilities to produce goods and services. Technology refers to the techniques used to change resources (labor, capital, land) into outputs (goods and services). For example china use different technologies in their product and expand globally
Different Resource Endowments
Resource endowments is the skills and abilities of a country’s labor force, the natural (minerals, farmland, etc.), and the superiority of machinery, infrastructure, communications systems. If a company have these resources then it can get advantageous of International trade.
Differences in Demand
Individuals in diverse countries may have different demands for various products. For example, Canadians may demand more beer, the Dutch like to do more demand of wooden shoes, and the Japanese for more fish than Americans would, even if they all faced the same prices.
Existence of Economies of Scale in Production
An economy of scale is a production process in which manufacturing costs fall as the scale of production increases.
Government Policies
Government tax and financial assistance programs change the prices charged for goods and services. These changes can be enough to produce advantages in making of certain products. In these situation, advantageous trade may occur solely due to differences in government policies across nations.