AGR 211 PRINCIPLES OF AGRICULTURAL

ECONOMICS
INTERNATIONAL TRADE
The growth of open markets is the main emphasis of the history of global free trade, which
is a history of global trade. It is well known that affluent world cultures have traded
throughout history. Based on theories on why a free trade policy would be advantageous to
countries, evolved over time. Over the past five countries, these theories have been
developed in the academic modern sense based on the commercial cultures of England and
a larger portion of Europe. The mercantilism policy had evolved in Europe in the 1500s prior
to the advent of free trade and has remained opposed to it to this day.
The meaning of international trade
The exchange of commodities and services between nations referred to as international
trade. A global economy is created by this kind of trading. International trade is the
exchange of commodities and services between various nation capable of satisfying the
needs of the general populace.
Uneven distribution of natural resources, climatic circumstance, growth rates, technology,
and skilled management all contribute to the necessity for international commerce. Every
country strives to maintain a good balance of payment.
Form of International Trade
There are two primary types of global trade
1. Bi-lateral international trade; this is the trading of product and services between two
nations
2. Multilateral international trade; this type of trade entails the trading, purchasing, and
selling of goods and services between multiple nation. The most prevalent type of trade
between nations in the world is this one.
Regulation of International commerce
. Traditionally, bilateral agreements between two countries ware used to control
commerce. Most countries had high tariffs and numerous restrictions on international trade
for centuries due to belief mercantilism. Free trade became the preeminent belief in the
19th century, notably in Britain.
. The most economically powerful countries typically support free trade the most, however
they frequently maintain selective protectionism for those areas that are strategically
significant, such as the protective tariffs imposed on agricultural by the United states and
Europe.
. The world trade organization oversees international trade regulation on a worldwide scale.
Benefits of international trade
I. International trade offers consumers and nations the chance to experience products
and services that aren’t offered in their own countries.
II. Almost every type of goods is available on the global market, including food,
clothing, accessories, oil, wine, stocks, money, and water.
III. Trade also occurs in services.
IV. A nations current account in the balance of payment accounts for imports and
exports
V. Global commerce enables wealthier nations to make better use of their resources
An advantage of international trade
1. Better resource management: producer aims to keep coast under control by combining
the many production components in the best possible way. As a result, production
elements are not being misused.
2. Large-scale economies: the producers have access to economies in production,
transportation management, finance, and advertising.
3. Cultural diversity: when goods and services are imported and exported, the rest of the
globe is exposed to the preferences and testes of one set of people.
4. Monopoly: it ends monopolies; occasionally, surplus goods and services can be
exported. The seller is unable to establish a monopoly in either situation.
5. Employment opportunities: As exports rise, nations must produce more items, which will
raise the need for labor.
6. Economic Development: Exports contribute to rising production and per-capital income,
which boots the economy.
7. International Relations: it fosters cordial links with other nations, which may result in job
openings, education scholarships, and other chances.
8. Technology transmit: As trade relations grow, they can transmit better processes and
equipment for inventions and innovation.
9. Price Stability: Due to timely delivery of commodities, it is advantageous to maintain
price stability. When there is a shortage due to exporting the excess commodities, the
goods might be imported to keep the level.
10. World peace: when nations engage in international trade, they wish to maintain cordial
relations with one another to boots exports.
Disadvantage of international trade
1. Local industries suffer: when nations import goods and services from elsewhere, they
are willing to utilize low pricing, and local industries are unable to compete with the
quality or price, a typical example being Chinese items.
2. Abuse of natural resources: After engaging in international trade, nations aim to export
large quantities of goods. They required to make items in large quantities that use
natural resources.
3. Unemployment: when business owner realizes that importing items can increase their
profits more than producing them locally, they choose to import, which causes
unemployment in the local economy.
4. Shortage in the local market: countries that over export in an effort to gain market share
experience a shortage in the local market and see an increase in pricing.
5. Colonialism: occasionally, independent states turn into the colonies of other countries.
Large corporations and megaprojects are two good examples.
6. Economic and Military war: every nations strives to be the export leader and to be
economically stable, which cause them to be competitors by acts terrorism, wars, and
other means.