The Importance Of International Trade

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International trade is the exchange of capital, goods, and services across international borders or territories. This form of trade has over centuries, proven to be vital because trading globally gives consumers and countries the opportunity to be exposed to goods and services not cheaply available in their own countries; thereby leading to increased economic welfare. Adams Smith alluding to this states thus:”…The tailor does not attempt to make his own shoes, but he buys them from the shoemaker. Furthermore, international trade has played a fundamental role in promoting world peace and stability, which must first exist for the peaceful exchange of trade and commerce to take place between nations; this is encapsulated in a popular quote by a 19th century French Liberal economist Frederic Bastiat- ”When goods don’t cross borders, soldiers will.”…show more content…
For this reason, the policy of “Free Trade” has been warmly embraced globally as tool to actualize an effective and viable international trading environment. What is Free Trade? Free trade, usually defined as the absence of tariffs, quotas, or other governmental impediments to international trade, allows each country to specialize in the goods it can produce cheaply and efficiently relative to other countries. Such specialization enables all countries to achieve higher real incomes. Furthermore, the main idea of Free Trade is that supply and demand factors, operating on a global scale, will ensure that production happens efficiently. Therefore, nothing needs to be done to protect or promote trade and growth, because market forces will do so

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