International Trade



Internationaltrade refers to the exchange of goods, services, products, andcapital across transnational borders (Langdana &amp Murphy, 2011).Trade between countries is significantly beneficial to theparticipating countries. However, it also comes with demerits aswell. This paper illuminates the advantages and disadvantages ofinternational trade.


Oneof the major benefits of international trade is that it enhancesinternational relations and cooperation between trade partners.Consequently, this business creates understanding and friendly tiesbetween the trade partners. The European trade bloc is a goodillustration of these enhanced international relations. The countriesin the European Union trade amongst themselves, and this has led tothem coming together because they share common interests.

Anotheradvantage of international trade is that it encouragesspecialization. This leads to the production of different goods inthe various countries. Countries with a relative advantage in theproduction of a particular good are encouraged to increase productionof that particular product to increase exports and ensure a goodbalance of payments in international trade. Germany, for example, isa leading manufacturer and exporter of automobiles (Langdana &ampMurphy, 2011).They have hence increased specialization in automobile exportindustry, and subsequently, specialization ensures quality products.


Onthe other hand, international trade has negatively impacted somecountries. According to Langdana &amp Murphy (2011),unrestrictedimports of high quality and cheaper goods has resulted to theimpediment of the development of local industries. Most localindustries, especially in the developing countries, have been unableto compete against the influx of these cheaper foreign goods and theysubsequently end up collapsing or suffering losses. This results inunfair competition and unemployment.

Also,international trade has compromised international peace and politicalstability. Many countries are forced into interfering in the internalpolitics of other nations to safeguard their business interests atthe expense of state sovereignty and stability in that particularcountry. This has been well illustrated by the recent turmoil beingexperienced in the Middle East. Western powers have invaded thecountries to safeguard their oil interests, and this has consequentlyresulted in civil wars and disputes in Syria, Iraq, and Yemen(Langdana &amp Murphy, 2011).


Itis evident that in theory, the benefits of international trade cannotbe disputed. But in practice, we also cannot ignore the other side ofthis trade. To maximize the benefits of international trade,appropriate structures have to be put in place to circumvent invasionof other nation`s sovereignty and ensure fair competition.


Langdana,F. K., &amp Murphy, P. (2011). Internationaltrade and global macro policy.New York, NY: Springer.