Write a 16 page PowerPoint Presentation on how International Trade affects the economies of Third World Countries. What are the Advantages and Disadvantages?
International trade helps countries to widen their markets for
goods and services that might not otherwise have been available at
home. As a result of international trade, the economy is more
dynamic and therefore more competitive prices, taking the customer
back to a cheaper product. International trade is intercountry
exchange of goods and services.
Globally, exporting offers customers and countries the ability to
be exposed to goods and services that are not available in their
own countries or are more costly at home. Global trade allows rich
countries to make more productive use of their resources— like
labor, technology, or money. Since countries have different assets
and natural resources (land, manpower, money, and technology), some
countries can manufacture the same good more efficiently and sell
it cheaper than others. If a country is unable to produce an item
efficiently, it can obtain it by trading with a different country.
This is known as international trade specialization.
A contemporary example is the comparative advantage of China in the form of cheap labor with the United States. Chinese workers produce simple consumer goods at a significantly lower cost of opportunity. The comparative advantage of the United States is in specialized, capital-intensive labor. American workers at lower cost of production create sophisticated products or investment opportunities. All profits from investing in and trading along these lines. Comparative advantage theory helps explain why protectionism has historically failed. If a country removes itself from an international trade agreement or tariffs are imposed by a government, it can produce an immediate local benefit in the form of new jobs and industry. This is often not, however, a long-term solution to a trade issue. This country would eventually grow to be at a disadvantage compared to its neighbours: countries that have already been better able to produce such products at a lower cost of opportunity.
Optimal use of natural resources: international trade is helping every country make the best use of its natural resources. Every country should focus on producing those products that are best suited to its resources. Energy waste is avoided. Availability of all types of goods By importing from other countries at lower costs, a country can obtain goods that it can not produce or that it does not produce due to higher costs. Specialization: Foreign trade contributes to specialization and allows various goods in different countries to be made. Because of the advantages of division of labor, products can be manufactured at a comparatively low price.
Goods are produced not only for domestic consumption, but also for export to other countries as a result of international trade. The world's nations can dispose on the international markets of goods they have in surplus. This leads to large-scale production and all countries around the world can obtain the benefits of large-scale production.
Underdeveloped countries with the machinery, equipment and technical know-how imported from developed countries will build and develop new industries. It leads to the growth of these countries and the world economy as a whole. The manufacturers in a country are trying to produce better quality products at the minimum possible price because of international competition. This increases efficiency and rewards customers worldwide.
Home Industry Growth Impediment: International trade has an
adverse effect on home-industry growth. It poses a threat to home
child industries ' survival. The upcoming industries in the country
that collapse due to foreign competition and unregulated
imports.
Economic Dependence: for their economic development, the
underdeveloped countries must depend on the developed ones. These
dependency also contributes to exploitation of the economy. For
example, European countries have exploited most of the
underdeveloped countries in Africa and Asia. Political dependence:
Subjugation and slavery are often promoted by international trade.
This impairs economic independence which puts political dependency
at risk. The British, for example, came to India as traders and
ultimately for a very long time ruled over India. Misuse of natural
resources: excessive exports can exhaust a country's natural
resources in a shorter period of time than would otherwise have
been the case. In the long run, this will cause the country's
economic downturn.
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