Impact Of Trade On The International Trade Market
The international trade of goods across the world accounts for approximately 60% of
the world Gross Domestic Product (The World Bank, 2014). A great proportion of
goods transactions occur every second. The primary question is whether international
trade benefits a country as an entirety, and, if so, why would a country implement
protective trade policies to restrict particular exports? To address this question, this
essay aims to explore the impact of trade on various economic stakeholders, including
consumers, producers, labour and government and, furthermore, will compare models
and theories with reality to ascertain the true winner/ loser in the international trade
market.
According to the Ricardian model, free trade allows a country ... Show more content
on Helpwriting.net ...
Consumers definitely benefit from increasing purchasing power in terms of lower
relative prices.
Nonetheless, the real prices of certain commodities such as lamb, tobacco and beef
have increased over time due to increasing world average income, which
encourages world demand. Interestingly, developing countries, which form the
predominant exporters of primary commodities, earn lower relative prices over
time, for instance, palm oil arrives primarily from Indonesia and Malaysia and raw
sugar arrives mostly from Brazil and Thailand. Contrariwise, the world suppliers of
lamb are the United Kingdom, Spain and Australia and, moreover, 14% of world
bovine meat arrives from the United States (Simoes, 2013). Therefore, it can be
argued that greater advantages are granted to suppliers in developed countries than
those in developing countries by trade liberalisation.
Aside from the impact on price, the opening of an economy attracts imports into the
domestic country, which results in the provision of variety for consumers. For
example, eleven mobile phone companies control 66.6% of the world market share,
inclusive of Samsung, Sony, Apple, Nokia and Huawei. These companies originated
in Korea, Japan, United States, Finland and China respectively (Williams, 2015).
Consumer s gain from choice and, therefore, higher utility can be achieved.
In recent years, the US has increased tariffs on the steel industry in order to restrict