Fair And Traiding Case Studies Example
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Countries should encourage international trade rather than remaining self sufficient because when you participate in international trade a country will be able to get market for its local goods at the same time imports goods and services it doesn’t produce locally (Blinder, 2008). There is no country that produces everything domestically. Maybe there are some countries that produce certain goods at lower cost that we produce, therefore it will be necessary that we import rather than producing that good locally (Livingstone, 2007). If a country specializes in producing a certain product, it will give it a comparative advantage in the international market and it will be able to outsource goods and services it doesn’t produce well.
Even if a country makes everything better and cheaper than foreigners there is still need for it to engage in international trade because in economics resources are scarce and unequally distributed (Livingstone, 2007). Therefore some countries are better at producing some commodities than others e.g. if a country like Kenya which is good at producing coffee at a cheaper rate than America and on the other hand, America is good at producing wheat at cheaper rate than Kenya can, then it will be prudent for the two countries to trade fairly. This will help America reduce the cost it could have incurred in producing coffee locally.
When we say we only buy American it may seem a nice thing since it will only benefit many Americans but from the economists point of view it is not a great idea for the country’s economy. If today we stop importing goods from other countries, other countries will also stop buying our goods and it will also have a negative impact on dollar in the international market (Livingstone, 2007).
The country should limit foreign trade to countries that have also opened their markets for us. Trading should be mutual and both countries should benefit from the trade. It should be a win- win situation for both countries (Blinder, 2008). If a country imposes high tariffs to our goods then we should also reciprocate by imposing high tariffs to them. Trade should be fair for it to benefits countries involved.
Alan S. Blinder. (2008). Free Trade: The Concise Encyclopedia of Economics | Library of Economics and Liberty. Retrieved from http://www.econlib.org/library/Enc/FreeTrade.html
Les Livingstone. (2007). Economics Made Easy. iUniverse.
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