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Governmental Barriers on International Trade - Essay Example

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The essay "Governmental Barriers on International Trade" discusses the essence of international trade, the benefits it provides to the countries engaged in international trade with each other, and the reasons behind why and how the governments put barriers on international trade…
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Download file to see previous pages Based on the assumption of comparative advantage, international trade is based on the relative efficiencies of the countries in producing goods and services at cheaper costs. Besides offering cost reduction advantages, there are also other benefits of international trade including the opening up of the economy to evolve technologically.
However, despite these perceived benefits, many governments do not allow free access to international trade and impose various trade-related barriers to curb the international trade. There are various reasons and ways through which governments put bars on international trade.
International trade is a field of economics that applies microeconomic models to help understand the international economy (Suranovic, 2004). The tools included for analysis in this field of economics include demand and supply analysis, consumer behavior, market structures as well as the impacts of market distortions.
The basic assumption behind international trade is a comparative advantage that exists when a country has superiority over another country in terms of producing goods or services. Comparative advantage is achieved when the opportunity cost of producing that good or service is low. A historical account of international trade would suggest that the theory of comparative advantage in international trade was developed by David Ricardo more than two hundred years ago. This basic theory of David Ricardo, however, was further modified and refined by Heckscher, Ohlin, and Samuelsson. All these economists argued that all the countries' different factor endowments of labor, land, and capital inputs. Countries will specialize in and export those products which use intensively the factors of production which they are most endowed.
Based on the comparative advantage of international trade, we also need to take into account the opportunity cost of producing goods and services. However, to achieve a mutual understanding, countries need to strike a rate of exchange for the goods and services to be imported and exported by each country. ...Download file to see next pagesRead More
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Governmental Barriers on International Trade Essay Example | Topics and Well Written Essays - 1250 words - 1. https://studentshare.org/macro-microeconomics/1545557-international-trade-has-many-potential-benefits-for-participating-countries-yet-government-regularly-impose-barriers-to-trade-by-using-real-life-examples-dis
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Governmental Barriers on International Trade Essay Example | Topics and Well Written Essays - 1250 Words - 1. https://studentshare.org/macro-microeconomics/1545557-international-trade-has-many-potential-benefits-for-participating-countries-yet-government-regularly-impose-barriers-to-trade-by-using-real-life-examples-dis.
“Governmental Barriers on International Trade Essay Example | Topics and Well Written Essays - 1250 Words - 1”. https://studentshare.org/macro-microeconomics/1545557-international-trade-has-many-potential-benefits-for-participating-countries-yet-government-regularly-impose-barriers-to-trade-by-using-real-life-examples-dis.
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