Advantages And Disadvantages of International Trade

Benefits Or Advantages Of International Trade

Some of the major advantages of international trade are as follows:

1. Promotes Specialization And Division Of Labor

International trade encourages the country to produce unique and quality products that can be easily exported in foreign countries. It requires specialization and division of labor for innovation and production of quality goods at lower price. So, it promotes specialization and division of labor.

2. Maximum Utilization Of Resources

Countries produce goods according to their available resources like natural resources, technological resources, financial resources etc. So, it helps to utilize country's resources properly.

3. Availability Of Products

Necessary goods can be imported from other countries to fulfill the demand of domestic country. So, international trade helps to obtain required products to satisfy country's demand.
4. Elimination Of Monopoly

Foreign trade discourages monopoly in the market because required commodities can be easily imported and surplus products can be exported in different countries. So, traders have no chance to create monopoly.

advantages disadvantages international trade

5. Industrial Development

Raw materials, technology, machinery and skills can be acquired from abroad because of international trade. This promotes industrial development in the country.

6. Lower Cost

International trade promotes specialization, division of labor and optimum utilization of resources by which large scale production with minimum wastage and leakage is possible. So, it helps to lower the cost of production.

7. Employment Opportunity

Because of international trade, large scale industries are established in the country. So, many people get job in the country. So, it creates employment opportunity.

Drawbacks Or Disadvantages Of International Trade

The main disadvantages of international trade are as follows:

1. Threat To Domestic Industries

Foreign trade may create threat to domestic industries because of the import of cheap products. Small industries may suffer due to unfair competition with big foreign companies.

2. Over Exhaustion Of Resources

Unrestricted export of minerals and raw material may lead to exhaustion of resources in the country. This may create environmental, social and economic problems in the future.

3. Shortage Of Goods

Producers try to export more products to expand market share and to earn more profit. This may create shortage of good in the domestic market.

4. Supply Of Harmful Products

Due to international trade, harmful goods may be imported in the country. Supply of these products in local market may effect people's health. Import of unnecessary goods negatively effects the economy.

Pros And Cons Of International Trade In Short

Pros:
- Ensures Maximum Use Of Country's Resources
- It helps to eliminate monopoly in the market
- It helps to bring specialization in the production process
- It minimizes the cost of production because of large scale production
- It generates employment opportunity because of industrial development in the country

Cons:
- High possibility of over exhaustion of natural resources
- It may create threat for domestic industries because of unfair competition
- Increases the risk of import of inferior and harmful products 
- It may increase economic dependence due to the loss of self sufficiency