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Gains From International Trade
In this division the various gains of international trade can be listed as follows:
- International Specialisation: International trade enables to specialize in the production of those goods in which each country has special advantages. Each country or region is endowed with certain special facilities in the form of natural resources, capital and equipment and efficiency of human powder.
- Increased Production and Higher Standard of Living: It is well known that specialization leads to the following:
- Best utilization of the available resources.
- Concentration on the production of those goods in which there are advantages.
- Saving of time and energy in production and perfecting of skills in production.
- Inventing and using new techniques of production.
All these indicate one basis advantage viz., increased production. Increased production will also mean higher standard of living for people in both the countries. Thus, due to international trade there is a gain for both the countries.
- Availability of Scarce Materials: International trade is the only method by which a country can supplement its storage of resources or certain essential materials. There is no country in the world including the U.S.A and the U.K, which has all the resources it requires. At the same time, there are some countries like Indonesia, which have been blessed by nature with some rare materials like rubber and tin. International trade ensures equal access to raw materials for all countries.
- Equalisation of Prices between Countries: An important gain of international trade or the effect of it is the tendency of internationally traded goods to have the same price everywhere. A commodity is cheap or costly depending upon its supply. It will be cheap in a country where it is produced with excessive supply of some essential factors.
- Evolution of Modern Industrial Society: The modern industrial society is based on extensive specialization and large-scale production. Both are based on the size of the market. The larger and more extensive the market for the products, the greater is the degree of specialization and large-scale production.
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