Benefits of International Trade
Benefits of International Trade
Syllabus requirement
Trade promotes increased competition, lower prices, greater consumer choice, access to resources and larger markets, economies of scale, more efficient production and resource allocation, and increased foreign exchange earnings.
Summary
This topic explains why countries trade internationally and the main benefits that arise from trade, such as increased competition, lower prices, greater consumer choice, access to resources, foreign exchange earnings, larger markets, economies of scale, and more efficient allocation and production of resources. Diagrams showing how world prices relative to domestic prices generate exports (world price above domestic price) or imports (world price below domestic price) are key for explaining trade flows and welfare effects. Understanding these benefits and their limitations is important for evaluating trade policy choices in IB Economics.
