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What are the benefits of International Trade?

International trade has major impacts on the world economy. Being able to be considered as one of its fundamental pillars of the economies. 

Index of contents

 

What are the benefits of International Trade? International trade has major impacts on the world economy. Being able to be considered as one of its fundamental pillars. This activity is mainly about the transaction of merchandise between different nations, enabling the exchange and flow of foreign currencies between international markets.

Due to its role in increasing globalization, several benefits can be mentioned. Among which are included those referring to world capital and benefits more related to the financial boost of the countries. Among the different advantages offered by international trade, the ability to supply the national market with merchandise that cannot be produced in the country is implicit.

In addition, of the benefits already mentioned within international trade, other benefits can be integrated such as:

International trade drives globalization

International trade favors globalization; This process includes methods of integration of various aspects between various nations. Where the economic aspect stands out, which promotes global interconnection. In this way, it makes it possible for countries to be part of the global economy.

This, in turn, is related to the degree of economic openness of each country. The degrees of opening include different degrees:

  • The so-called autarchy, with extreme policies regarding foreign trade. That prevent almost any form of trade or economic transaction of a certain country with other markets.
  • Total economic opening, which represents the opposite of autarky, since unlimited freedom is provided to foreign trade. In this case, there are no restrictions or tariff controls on the entry of merchandise into a country.
  • On the other hand, most countries involved in international trade use intermediate economic openings. Where control measures are implemented, such as importing only products that cannot be efficiently manufactured in the country, as well as the creation of agreements between a certain group of nations.

Effect on technological development

Technological development and international trade are closely related, so that the growth of one drives the progress of the other. On the one hand, if international trade shows interest in carrying out commercial transactions with technological products. This discipline will have the opportunity to expand and develop in various nations.

Likewise, technological development intervenes in the growth and facilitation of commercial processes between different nations. To a large extent, thanks to technology, there are advances in transportation, logistics, and international marketing. Also allowing to facilitate negotiations between geographically distant markets.

International trade reduces unemployment

International trade has implications for the internal economy of countries, in such a way that it promotes the development of private companies that are in charge of manufacturing quality products to be exported.

This, in turn, opens up a large proportion of employment opportunities in various fields related to international financial transactions. From the obtaining and handling of raw material, its processing and elaboration of the products, to administrative issues and the logistics of shipping the goods.

Provides financial security

The growth and optimization of international trade provides financial security to investors of national and transnational companies. In other words, the greater the scope of international trade, the greater the degree of investment in the different organizations that participate in this commercial practice.

International trade drives economic growth of companies

Among the benefits offered by international trade , one cannot fail to mention those related to the growth of organizations involved in the export of goods and services.

Channels are the perfect means for well-established companies to develop beyond national borders. On the one hand, companies have the possibility of importing products and resources that reduce their production costs. In addition, they can meet the needs of international markets, generating a significant income of foreign currency to their own country.

Create competitiveness

If a country implements the correct foreign trade policies, in addition to creating security and protection over the companies of its nation. It is possible that a competition will develop between imported products and local products.

This not only allows users to have more options for goods and services, but also allows national companies to see the need to improve and optimize all their activities. To offer good quality products, capable of competing with those imported.

Stimulates the creation of international agreements

Many countries in the world have created commercial agreements and conventions, thanks to international trade . This has favored the growth of strong economic relations between countries, which are capable of supplying the market needs of their trading partners. At the same time, a group of nations have been generated that share free market agreements, which allow their own nations to be promoted as well as the global economy.

International trade increases the reputation of nations

The development of international trade has given way to some nations becoming world powers in terms of the production of high quality goods and services . In addition, the mass production of certain products. This, on the one hand, offers a competitive advantage to these nations with respect to other countries.

In turn, this has caused these powers to have a favorable trade balance thanks to their large volume. That is why these countries can create confidence and security in the markets of other nations. Allowing convenient trade agreements to be generated, which further boost their economic growth.

Learn more about the advantages and benefits that this commercial practice brings to countries and the global economy, training you in a Master's Degree in International Trade .