International trade implies the openness of the economy. It is the antithesis of self-sufficiency economy, where a country can own efforts to cover all the needs of its citizens. Currently, the development of an open economy can be seen in many countries. The advantages of this trend are simple: international trade in general defines the standards of the world market and couples with the reduction in the cost of goods. This happens due to the increased specialization in the distribution of production, which allows to allocate resources in the most rational way and encourages competition between domestic and foreign producers, which improves the quality of products. Open trade improves the investment climate and stimulates the inflow of …show more content…
Among the indicators of participation in international trade: increasing the share of imports in GDP - this ratio is defined as the import quota. The ratio of exports to gross domestic product is defined as the export quota. Thus, the value of import and export quotas shows the country 's involvement in world trade.
An example with of with a high export quota is Belgium. Export quota is 80%, according to the portal of foreign trade activities. The export quota means that Belgium allocated a certain quota that limits the amount of export supplies of certain goods. It is necessary as a mean to stabilize the prices of these commodities, as Belgium is dependent on their exports. "Trade turnover in Belgium in 2013 was 694.4 billion euros. And it was 688.3 billion euros in the same period of 2012". "According to the National Bank of Belgium, the basis of Belgian exports in 2013 were chemical and related industries, which accounted for 23.2% of total exports” . Moreover, in Belgium, the export structure is also prevailed by commodities such as mineral products (13.4%), machinery and equipment (10.3%), and vehicles (9.8%)" . The bulk of foreign trade operations of Belgium performs with the EU countries, whose shares in exports is 69.8%. The majority of Belgian exports (16.8%) are sold to Germany (59.5 billion. Euros)” .
Thus, we see that the volume of Belgium export increases.
Belgium in the structure of world
The general standard for measuring the overall size of the nation's economic activity is the value of gross domestic product (GDP). One of the components of GDP is a measure of the value of exports and imports of goods and services. The hitch is that GDP includes a large component of non-tradable that does not or cannot enter into international trade flows to any significant degree-for example, most buildings and structures, and personal and government services. Consequently, even though internationally traded items such as financial services and travel and transportation services are included in GDP, when we compare the size of the foreign sector with the size of the domestic economy, we end up comparing apples with apples and pomegranates. As a result, comparing exports or imports of goods and services to GDP may understate the importance of international trade to relevant sectors of the domestic economy
There is no doubt that increasing in international trade is supporting the economic growth across the world, raising incomes and creating jobs. However, international trade can also some create economic obstacles, such as the international context and the market policy and regulations of each country, and consequently it can be said that the effects would have positive and negative sides, and it is useful to mention all of them and to take them into consideration.
Many indicators serve to measure the degree of trade openness. The first is designed to assess directly the level of economy openness to foreign trade. The degree of openness measures the level of the external constraint and it is obtained by the ratio of the value of foreign trade on the GDP. The second indicator (distortion) aims to measure the impacts of protectionist policies of a country.
Trade between nations of the world is extremely important in many aspects such as keeping a strong relationship between countries and to hold a good strong trust. It is through trade that
In the midst of the help from the extremely advanced transportation, modern production methods, rapid industrialization and the increasing facilities of outsourcing of trade and services the international trade organization is increasing and decreasing very fast in the globe. The international trade account has a good distribute of a country’s gross on domestic product. It is in addition one of most important foundations of income designed for the developed as well as to developing country. For the reason that of many country benefits from the international trade approximately every one in the
Moreover, imports are also utilized in measuring a country’s GDP and GDP per capita. Imports are those goods and services made in a foreign country and taken in to another. This is usually done because it is cheaper in terms of labor to retrieve the product as an
Problem: Working class Americans experience difficulties in finding work as labor intensive jobs are moved abroad. At the same time free trade is beneficial for the global economy as a whole. Here we can see a clash in interests as the interests of those in developing countries are protected as well by the WTO and free trade tends to be beneficial for the economy as a whole. However, the problem is that 20% of the prime male working population between the ages of 25-54 are unemployed and this number is around 35% of those who don’t have a high school diploma. For marginalized groups such as African American males the teen unemployment is over 40% and that of young black men from the ages of 16-24 is over 30%.
The benefits that arise from international trade can be derived from nations that have acquired trade power and established their revenue. According to Stanley, “nations with strong international trade have become prosperous and have power to control the world economy. The global trade can become one of the major contributors to the reduction of poverty.” Over the years, this type of trade has thrived as a result of the numerous benefits that come from importing and exporting good and service on a global scale, more specifically because of the increasing efficiency as well as the effects of supply and
International trade has become a very important means of survival for global economies in this day and age. As countries continue to grow and resources become smaller, trade with other countries who have provide certain resources in a greater capacity becomes very lucrative. At the same time, those same countries must be able to offer something of similar value. Through this ability of trade, this allows countries to
Economic analysts say trading among other countries with no stipulations improve global efficiency in resource allocation (Tupy, 2005). Free Trade delivers goods and services to those who value them most and allows partners to gain from specializing in the producing those goods and services they do best; according to Tupy’s findings, Economists call that the law of comparative advantage. Tupy also states when producers create goods they are comparatively skilled at i.e. Germans producing beer and the French producing wine, those goods increase in abundance and quality. Trade allows consumers to benefit from more efficient production methods, for example, without large markets for goods and services, large production runs would not be economical. Large production runs, in turn, are instrumental to reducing product costs while lower production
This is a government-imposed trade restriction that limits the number, or in certain cases the value, of goods and services that can be imported or exported during a particular time period. Quotas are used in international trade to help regulate the volume of trade between countries. They are sometimes imposed on specific goods and services to reduce imports, thereby increasing domestic production. For example there have been proposals by the European Commission to reduce quotas on the fish exported by Scotland. This includes cutting west coast haddock and cod quotas by 25% and 50% correspondingly. Quotas for prawns, one of the most valuable catches, would be cut by 9% in the North Sea and15% in the west. This makes West Sea more advantaged than the North Sea. This benefits the EU as they are trying to reduce dumping in the countries where fish is being imported. On the hand these quotas will encourage smuggling of the fish into the country which means it will not be taxed and the government will be losing money on it
Countries are enabled by free international trade to specialise or to focus in the production of the goods in which they have a comparative advantage. Specialisation countries can take the benefit of efficiencies generated from increased output and economies of trade. The size of the firm’s market are increased by the international trade which results in lower average costs and increasing in productivity, as it ultimately leads to increase in production.
Trade freedom is a highly important factor in determining economic freedom and wealth. No one single country has the resources required to sustain the current standards of living in developed or developing nations. Trade requires specialization according to a country’s comparative advantage. Specialization allows the most efficient and effective use of a country’s scarce resources, whether that be natural resources or labor resources. The Index shows the economic benefits of specialization and trade.
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.
It is critical to understand the aspects of an open economy first, before taking into considerations the consequences of a country’s decision to cut income taxes on the country’s exports. An open economy can be described as a situation where various regions and countries transact business with each other freely without having impediments that would be regarded as restrictive by either country. In this sense, individuals and businesses are free to transact and exchange any forms of goods or services internationally or locally with their neighboring countries.