Trade Patterns in the United States and Latin America
Trade Patterns and Developments in the United States and Latin America Warrington
A Study of International Trade
Thomas Edison State College
International Management 372
Professor: William Baker
06/30/2013
Introduction A free market economy creates tremendous opportunities for countries engaging in free trade. In a system where free trade is promoted, countries and consumers benefit from the low cost, higher quality and the variety of goods that are available for purchase. Local domestic companies however, appear to be at a disadvantage because of the increased competition from foreign competitors with higher economies of scale. In this paper, we will discuss the benefits of trade between nations, different theories of trade flow between nations, the impact of unrestricted free trade and the strategies that government and businesses can utilize to compete in the global marketplace.
Benefits of Trade between Nations Trade between two nations provides a number of benefits for each participating nation. Nations trade with each other to expand the variety of goods and services available. An increase in the supply of one particular commodity in a country reduces the cost of that commodity providing allowing consumers to spend less money at the time of purchase. For example the United States imported oil from Venezuela for decades, which allowed consumers to enjoy low cost of fuel at the pumps. According to Hill (2011), “the theories of Smith, Ricardo and Heckscher-Ohlin tell us that a country’s economy may gain if its citizen buy certain products from other nations that could be produced at home”(p. 161). International trade also allows countries to enjoy products at low cost that they are unable to produce during a particular season. This benefit of international trade allows consumers to enjoy a particular product
A Study of International Trade
Thomas Edison State College
International Management 372
Professor: William Baker
06/30/2013
Introduction A free market economy creates tremendous opportunities for countries engaging in free trade. In a system where free trade is promoted, countries and consumers benefit from the low cost, higher quality and the variety of goods that are available for purchase. Local domestic companies however, appear to be at a disadvantage because of the increased competition from foreign competitors with higher economies of scale. In this paper, we will discuss the benefits of trade between nations, different theories of trade flow between nations, the impact of unrestricted free trade and the strategies that government and businesses can utilize to compete in the global marketplace.
Benefits of Trade between Nations Trade between two nations provides a number of benefits for each participating nation. Nations trade with each other to expand the variety of goods and services available. An increase in the supply of one particular commodity in a country reduces the cost of that commodity providing allowing consumers to spend less money at the time of purchase. For example the United States imported oil from Venezuela for decades, which allowed consumers to enjoy low cost of fuel at the pumps. According to Hill (2011), “the theories of Smith, Ricardo and Heckscher-Ohlin tell us that a country’s economy may gain if its citizen buy certain products from other nations that could be produced at home”(p. 161). International trade also allows countries to enjoy products at low cost that they are unable to produce during a particular season. This benefit of international trade allows consumers to enjoy a particular product
References: Baumol, J. William, Blinder, S. Alan. Macroeconomics: Principles and Policy, 12th ed.: Principles and Policy. Cengage Learning, 2011. Moberg, Mark. Slipping Away: Banana Politics and Fair Trade in the Eastern Caribbean. Berghahn Books, 2008 Hill. Charles W. L. (2011). International Business: Competing In The Global Marketplace. McGraw-Hill. 2011