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What Are the Advantages of International Trade?

Thanks to international trade, strawberries — which are only available in the spring in temperate climates — can be available all year.
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  • Written By: Jessica Ellis
  • Edited By: Bronwyn Harris
  • Last Modified Date: 03 July 2014
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International trade is an ancient concept that remains controversial in the 21st century. The trading of goods, services, and labor across borders can have many pitfalls, but can also result in many benefits for all involved. Some of the advantages of international trade include market diversity and consistency, independence from local monopolies, cultural exchange, technological exchange, and potential for increased human rights and environmental protection standards. The advantages of international trade are not always inherent; many can only be exploited with the assistance of governmental regulations and social activism.

The size of a market is often defined by how many consumers have reasonable access to the available goods. In pre-modern times, a market might only be accessible to those within walking or riding distance. As a result, people were limited to the goods and services produced locally. The vast technological advancements in transportation and preservation helped widen markets, an effect known as “globalization.” One of the major advantages of international trade is that more consumers have access to a greater selection of goods, thanks to globalization.

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One of the most helpful advantages of international trade in the agricultural market is the creation of consistent availability. Different climates mean that different areas can only produce certain fruits and vegetables at certain times of the year; for instance, in a temperate climate, strawberries may only be locally harvested in late spring. Thanks to warmer climates elsewhere and fast transportation, however, strawberries, as well as many other types of produce, can be supplied year-round, thanks to international trade.

The diversity of goods from international markets also helps protect consumers from the detrimental effects of monopolies. When there is healthy global competition, prices tend to drop, since consumers will gravitate toward the best deals. A lack of competition can lead to stagnation in the market, or worse, the cornering of the market by a single entity. When one local supplier controls the entire market, prices tend to skyrocket. One of the primary advantages of international trade is expanding consumer choice so that suppliers cannot establish monopolies.

Some people consider one of the most vital advantages to international trade to be the exchange of culture and technology that occurs through free trading. Sociologists frequently argue that cultural hatred and suspicion is bred from fear of the unknown; by giving different nations a chance to work with each other through trade, relationships can be strengthened and xenophobia dispelled. In technological areas, developing nations also frequently benefit from the influx of new technology from industrialized nations, which may allow faster improvement of infrastructure and business.

Though it is not always considered a priority, some environmental and social activists believe that one of the biggest benefits of international trade is the opportunity to improve environmental and labor standards throughout the world. By creating partnerships with nations that vow to use environmentally safe practices and provide fair wages and hours to workers, industrialized nations can help reduce ecological damage and improve human rights.

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Discuss this Article

serenesurface
Post 3

I think that global trade is awesome because I love buying products made in different countries. My car is Japanese, my shoes are Chinese, my food is American and my shirt was made in Mexico. If it wasn't for trade, I would not have at least 70% of what I have now.

bear78
Post 2

@dljohn-- You've touched on one of the reasons why international trade is controversial.

Have you heard of the term comparative advantage in international trade?

A country is said to have a comparative advantage over another when it can produce a good at a lower price. Comparative advantage forms the basis of international trade. When countries sell goods they have a comparative advantage in, everyone benefits.

Not only does this allow consumers like you and me to get goods for cheaper, but it also increases the variety of goods that are available to us. Meanwhile, the economy also grows and our quality of life increases in the process.

The worker who gets laid off from his job won't be very happy about it. For this reason, some governments impose high tariffs on certain goods to protect that industry. So even though this can seem like a disadvantage, governments can avoid it if they want to.

ddljohn
Post 1

Can someone tell me how it is advantageous for me when the factory I work at is shut down because that product can be bought for cheaper from another country?

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