International Trade Concepts Essay Example | Topics and Well Written Essays - 500 words

International Trade Concepts - Essay Example Engaging in international trade means that the demand for the country’s products is no longer limited to and determined by the home country. With international trade, the country’s product will have greater demands. These greater demands mean increase in wealth for the countries. Because there are greater demands for a product, with costs of production decreasing, assuming that with specialization the technology improves and the efficiency is increasing—production increases and wealth comes to the country. International trade encourages local competition within its industries in order to achieve efficiency. With more products in the market due to import or other companies bringing their products to compete with local competitors, local players are forced to produce more competitive products to satisfy the consumers. This stimulation of local competition can also bring down the prices of goods in a given industry. By making excellent products available to consumers at the same price level, satisfaction is met among the population. When firms go trading with countries, it is very usual that they bring with them the technical know-hows as regards their production. This experience adds to the increase in a country’s intellectual capital. When there is trade of goods, it is likely that trade in certain knowledge also follows. Therefore, this is beneficial to both countries as they exchange more knowledge in order to increase their technological capacities. When more efficient foreign players enter a local industry, it can offer prices below the market clearing price. Due to this, there will be issues like dumping because the players’ interests are at stake, when they cannot compete with the more efficient foreign player in terms of price. International trade, therefore poses a limitation—a country should also consider the interests of the local players when