World Trade

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Recommended: International trade and its effects

Traditional and most developed form of international relationships is world trade. World trade is around 80 percent of all international economical relationships. International trade is a form of communications between manufactures of different countries that comes out as a result of world labor division, and express mutual economic dependence. Wild, in his book gives us a definition of world trade as: "The purchase, sale, or exchange of goods and services across national borders induced by sellers, buyers and intermediary in different countries." International trade includes import and export of goods and services; ratio between them is called trade balance. According to international trade theory of David Ricardo, every country should specialize on manufacturing goods that it has comparative advantage in: lower costs on labour and raw materials. Ricardo states that in this case, every country will benefit. This makes world trade necessary for all countries. International trade in basically is based on supply and demand. If manufactures of goods or service providers from one country are ready to satisfy the demand of people in another country, the trade between these countries can be performed. If one of these factors, supply or demand, world output factors decreases, then international trade will also decrease. World output and trade are directly related to each other. In case of demand affecting on supply we can take Lebanon as an example. Now, when the political situation is not stable, and the country is at war, purchasing power of population enormously decreased. Therefore demand for most of the products, or services imported in the country before, also decreased. This obviously affects international trade between Lebano... ... middle of paper ... ... cuts of the international trade, they will no longer obtain such products as cars, TVs, computers that are being imported from UAE, there will be shortage of food, such as chocolate, milk products, that are being imported from Russia. There will be no supply from Turkey in clothes, shoes and other lightweight industry products. As we can see, international trade may contain dangers of trade dependency and other negative sides, but it is necessary element for every healthy economy in the world. Work Cited Ricardo, D. "Beginning of political economy and taxation." P 335 Leontiev, V. Factor Proportions and the Structure of American Trade. Further Theoretical and Empirical Analysis// The Review of Economics and Statistics. 1956. ¹4. Ð.398-399. www.wikipedia.org Free Online Enyclpedia www.southafrica.info Ultimate Guide to South Africa.

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