Академический Документы
Профессиональный Документы
Культура Документы
You May Also Like: Capitalize on price trends with Academys Technical Analysis course. Watch trailer > >
If you walk into a supermarket and can buy South American bananas, Brazilian co ee and a bottle of
South African wine, you are experiencing the e ects of international trade.
International trade allows us to expand our markets for both goods and services that otherwise may
not have been available to us. It is the reason why you can pick between a Japanese, German or
American car. As a result of international trade, the market contains greater competition and
therefore more competitive prices, which brings a cheaper product home to the consumer.
HOT DEFINITIONS
Short Squeeze
Looking for a quality broker? Read Investopedia's Buy Limit Order
unbiased review of Charles Schwab.
SPONSORED BY INVESTOPEDIA
http://www.investopedia.com/articles/03/112503.asp 1/5
11/5/2017 What Is International Trade?
SPONSORED BY INVESTOPEDIA
Trailing Stop
U.S. Foreign Trade by Country Hostile Takeover
Total goods traded with the United States in 2015 Halloween Strategy
Satoshi Cycle
Search to Zoom
Total Trade
Let's take a simple example. Country A and Country B both produce cotton sweaters and wine.
Country A produces ten sweaters and six bottles of wine a year while Country B produces six
sweaters and ten bottles of wine a year. Both can produce a total of 16 units. Country A, however,
takesLooking
threeforhours tobroker?
a quality produce the ten sweaters and two hours to produce the six bottles of wine (total
Read Investopedia's
unbiased review of Charles Schwab.
SPONSORED BY INVESTOPEDIA
http://www.investopedia.com/articles/03/112503.asp 2/5
11/5/2017 What Is International Trade?
SPONSORED BY INVESTOPEDIA
of five hours). Country B, on the other hand, takes one hour to produce ten sweaters and three hours
to produce six bottles of wine (total of four hours).
But these two countries realize that they could produce more by focusing on those products with
which they have a comparative advantage. Country A then begins to produce only wine, and Country
B produces only cotton sweaters. Each country can now create a specialized output of 20 units per
year and trade equal proportions of both products. As such, each country now has access to 20 units
of both products.
Note that, in the example above, Country B could produce both wine and cotton more e iciently
than Country A (less time). This is called an absolute advantage, and Country B may have it because
of a higher level of technology. However, according to the international trade theory, even if a
country has an absolute advantage over another, it can still benefit from specialization.
For the receiving government, FDI is a means by which foreign currency and expertise can enter the
country. These raise employment levels, and, theoretically, lead to a growth in the gross domestic
product. For the investor, FDI o ers company expansion and growth, which means higher revenues.
In contrast, protectionism holds that regulation of international trade is important to ensure that
markets function properly. Advocates of this theory believe that market ine iciencies may hamper
the benefits of international trade and they aim to guide the market accordingly. Protectionism
exists in many di erent forms, but the most common are tari s, subsidies, and quotas. These NEW
As it opens up the opportunity for specialization and therefore more e icient use of resources,
international
Looking for atrade has the
quality broker? potential
Read to maximize a country's capacity to produce and acquire goods.
Investopedia's
unbiased review of Charles Schwab.
SPONSORED BY INVESTOPEDIA
http://www.investopedia.com/articles/03/112503.asp 3/5
11/5/2017 What Is International Trade?
SPONSORED BY INVESTOPEDIA
Opponents of global free trade have argued, however, that international trade still allows for
ine iciencies that leave developing nations compromised. What is certain is that the global economy
is in a state of continual change, and, as it develops, so too must all of its participants.
Ads
Start Download - View PDF
www.easypdfcombine.com
Merge & Convert Files into PDFs w/ EasyPDFCombine - Free!
RELATED ARTICLES
INSIGHTS
Wine Country: America's Love For Wine
As the largest market for wine, Americans spent nearly $60 billion on vino in 2016.
INSIGHTS
The 4 Countries that Produce the Most Wine
Learn about the four largest wine-producing countries in the world, along with
information on the most notable wines these countries produce.
MANAGING WEALTH
INVESTING
INVESTING
MANAGING WEALTH
INVESTING
Looking for a quality broker? Read Investopedia's
Howunbiased
Globalization A ects
review of Charles Developed Countries
Schwab.
SPONSORED BY INVESTOPEDIA
http://www.investopedia.com/articles/03/112503.asp 4/5
11/5/2017 What Is International Trade?
SPONSORED BY INVESTOPEDIA
The increase in communications technology has companies competing in a global
market.
INSIGHTS
The Balance Of Trade
The balance of trade is the di erence between a countrys imports and exports. A
trade deficit occurs when a country buys or imports more goods from other
countries than it sells or exports. ...
RELATED FAQS
Q: What is the di erence between comparative advantage and absolute advantage?
Whereas absolute advantage refers to the superior production capabilities of one nation versus another,
comparative advantage ... Read Answer >>
Q: What economic indicators are most used when forecasting an exchange rate?
Discover what economic indicators are most widely used to forecast a countrys exchange rate and how various
factors influence ... Read Answer >>
Search Investopedia
DICTIONARY: # A B C D E F G H I J K L M N O P Q R S T U V W X
2017, Investopedia, LLC. All Rights Reserved Terms Of Use Privacy Policy
http://www.investopedia.com/articles/03/112503.asp 5/5