International Trade and The Global Economy - 1018 Words

Free Trade International trade links countries to the global economy (Vollrath, 1991). The global economy needs free trade. Countries need free trade. Trade with other countries occurs at some level in every country globally. There may be some indigenous tribes within some countries that can lay the claim that they are self-sufficient, however, there is not a single country that can say the same. Proponents of an open trading system contend that international trade results in higher levels of consumption and investment, lower prices of commodities, and a wider range of product choices for consumers (Carbaugh, 2009, p26). Free trade is necessary. How do countries decide what to import and what to export? Comparative Advantage†¦show more content†¦Classical Trade Optimism Countries and governments are always looking at the economy both internally and externally. With current economic conditions within the United States and the world, economists are questioning free trade more frequently than when times are good. Economic development shapes the patterns of world trade. Education, technical skills, income, and natural resources, such as land, water, and climate, determine what countries will produce and trade. Low-income countries often specialize in industries that use large numbers of unskilled workers. High-income countries concentrate production in areas that take advantage of their abundance of highly skilled labor (Vollrath, 1991). World trade plays an important role in how stable the economy is. Imagine if the Unites States allowed more oil exploration and actually had enough oil to sustain our nation and also to start to export the commodity. How would the world economy change? If free trade changes, the world economy would adjust. Countries would find other alternatives for import and export of goods to ensure they are able to stay competitive. Conclusion What if free trade as the world knows it changed? What would the implications be? Would all countries still exist as we now know them, or would new leaders in the global economy emerge? Over the years, economists challenge the status quo - the theory of comparative advantage. Perhaps now is the perfect time toShow MoreRelatedThe Global Economy and International Trade1357 Words   |  6 Pagesï » ¿The Global Economy and International Trade What Is International Trade International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history, its economic, social, and political importance has been on the rise in recent centuries. 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