Pros and Cons of International Trade

International trade is the exchange of goods and services between other countries. Trading with other countries gives consumers an opportunity to explore other commodities and services from other countries.

There is immobility of factors of production when there is international trade. There is the use of different currencies, different political units and a wide market for the goods if a country engages itself in international trade.

Pros and Cons of International Trade

Pros of International Trade

  1. A wide variety of goods

When a country engages in international trade, there is a wide variety of goods as the neighboring country is able to export its goods hence consumers get access to a wide range of commodities.

  1. Disposal of surplus goods

A country is able to dispose of its surplus in case there is. This will enable a country to earn from the surplus instead of it going bad.

  1. Benefit from currency exchange

Every country has a different currency. When there is international trade, then there is a possibility of a country enjoying different currency in that the currency can have a higher value hence getting profit from the exchange of goods or services.

  1. Increases revenue

A country is able to earn revenue from the exports hence the money can be used in other sectors which will act as economic growth to a country.

  1. Improved economic growth

As the government will earn revenue from the exports, it may invest the money in other sectors such as transport and communication, agriculture or industries hence there will be economic growth in the country.

  1. Creation of job opportunities

There will be avenues of job opportunities as there will be in need of many people in the companies to enhance efficient production hence improving the standards of living of people in the country at large.

Cons of International Trade

  1. Shipping customs and duties

The main problem hindering international trade is the duty and customs placed on imports. There are high customs and duties that need to be paid on imports hence this makes it difficult for the importers to import goods.

  1. Cultural differences

Each country has got its own culture and this makes it difficult for other countries to export their products to other countries.

  1. Political instability

When a country is experiencing political instability, it becomes difficult for it to engage in international trade as the traders may fear the state hence the country may lack access to certain goods.

  1. Communicable diseases

Diseases also affect international trade in that goods are restricted from being brought in to and out of the countries that are affected hence it also hinders trading activities.

  1. Theft

Some goods can be stolen in the process of shipping them hence it discourages a lot of traders from the kind of trade as they fear that they may suffer loss in return.

Summary

International trade is good and most preferred in that a country is able to get the goods they do not produce hence mostly preferred by many countries. The drawbacks can be handled by the country to encourage traders to engage in international trade.

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