In the paper “WINNERS AND LOOSERS FROM INTERNATIONAL TRADE” the author analyzes the losers and the winners in international trade. He defines them as the producers who live in the nations that import or buy goods from other nations yet they are produced locally within the country…
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Also known as the sellers. The main aim of trade is to get profits and this is greatly received by the producers of the Chinese products that are exported to other countries such as USA. International trade also exists between countries such as Brazil and Japan. Japan is a renowned producer of motor vehicles, non-electrical machinery, tools and mechanical apparatus, iron and steel products just to name a few. Brazil on the other hand is a renowned exporter of soybean, orange juice, iron ore, oil, coffee and raw sugar. Trade between these two countries has winners and losers just like the previously mentioned between USA and China. The winners in the trade are the consumers in the country buying the products. For example in this case, when Brazil exports its products to Japan, the winners are the consumers or the people buying the products in Japan. Other winners are the producers of the products in Brazil who sell the produce or export the produce to Japan. The losers involved in this example of trade are the producers of the similar type of imported products in Japan. The producers of the similar type of products imported are losers because they will not have market for their products in Japan. The consumers of the exported products in Brazil are also losers in the trade. This is because most products produced are exported hence there will not be available products for the consumers to use. International trade involves several laws. One of them being the law of comparative advantage. The law of comparative advantage is a fundamental economic principle that explains the disparities experienced in trade between rich and poor nations. It states that every country production...
International trade involves several laws. One of them being the law of comparative advantage. The law of comparative advantage is a fundamental economic principle that explains the disparities experienced in trade between rich and poor nations. It states that every country production activity that provides a lower opportunity cost than that of another country. It explains how and why there is an inclination by technologically superior countries to purchase goods from technologically inferior countries. This in essence means that both the trading nations can benefit mutually by each country producing goods with lower levels of opportunity costs. This is aimed at balancing the economies of scale as far as international trade is concerned. This can be further divided into two related concepts:
• Absolute Advantage:
This refers to the ability of a country to produce more goods using fewer resources. This in most cases is facilitated by superior technology as employed in the processes of production, manufacturing and transportation therefore developed nations have an absolute advantage over the developing nations which are yet to utilize technology in its entirety. Hence the developing nations are mainly net importers while most developed nations are net exporters.
• Comparative Advantage
This is the ability of a country to produce one type of food at a much lower opportunity cost than other goods, as compared to production in other countries.
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