International trade国际贸易.docxVIP

International trade国际贸易is the exchange of goods or services between many countriesImport进口is the purchase of a good or service made overseasExport出口is the sale of a good or service made at homeAbsolute advantage绝对优势Each country will benefitfrom specialization in those commodities in which it has an absolute advantage, (i.e., being able to produce at a lower real cost than another country), exporting themand importing other commodities which it produces at a higher real cost than another countryComparative advantageTrade will benefit both nations provided only that their relative costs, that is, the ratios of their real costs measured by labor-hour or another commodity, are different for two or more commodities. In short, trade depends on differences in comparative cost or opportunity cost, and one nation can profitably trade with another even though its real costs are higher or lower in every commodity.Benefits of International TradeWider market with the increasing number of trading partnersGrowth of economyCheaper goodsGreat variety with goods coming from more countriesReasons for trade restrictionsPure political reasonsThere is an infant industry argument which maintains that a new industry needs to be protected until the labor force is trained, the production techniques are mastered and the operation becomes large enough to enjoy the economies of scale and to be able to compete in the market.Many countries want a diversified economy to be less dependent on foreign countries both economically and politically. In addition, it is crucial for countries to protect their vital industries, which are strategically related to stability and economic development.Domestic jobs need to be protected from cheap foreign labor.Imposing restrictions on import is aiming to maintain a balance of trade and balance of payments.Protection is needed when foreign firms receive subsidies and government benefits and sell goods abroad at below-cost price to capture a market.Tariffis a duty