Contents Introduction to International Trade 3 History and Evololution of International Trade 3 Trends in International Trade 3 Theories of International Trade 5 Absolute Advantage by Adam Smith 5 Comparative Advantage by David Ricardo 6 Gravity Model by Tinbergen 7 Benefits form trade for the poorest of nations 8 Conclusion and Recommendations 9 Bibliography 10 Introduction to International Trade International trade is an activity wherein there is an exchange of goods, services, and capital for a consideration that happens across the national borders of a nation. Thus, the two parties which undertake such an activity ate called importer (the one who is buying) and an exporter (the one who is selling). This usually represents a significant proportion a nation’s overall output which is measured through its GDP (Gross Domestic Product). The only reason why such a trade happens is because there are gains from trade and like what we see in any transaction, be it domestic or international, the aim is to benefit from that transaction for both the parties where one or both fulfils their needs for a consideration being given in exchange. History and Evololution of International Trade The very history of International Trade can be traced back to the 19th century B.C. where the records attest to the existence of a merchant colony of Assyrian at Kanesh in Cappadocia, now in Turkey. Then we have traces of Cargo being shipped from India and Egypt for trade in Aden. Then we have Alexandria in the 5th century A.D. to the Portuguese explorer, Vasco De Gama in India in the end of the 15th century A.D. In the modern times we have the East India Company, Dutch Expeditions, and more. As trade modernized, technology developments, growth in popul... ... middle of paper ... ...on and Sovereignty- a struggle against opportunism. the journal of international business, 56-61. Ricardo, D. (2013). The Principles of Political Economy and Taxation . Retrieved November 27, 2013, from http://socserv2.socsci.mcmaster.ca: http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/ricardo/prin/index.html Smith, A. (1776). An Inquiry into the Nature and Causes of the international trade. London. stat.wto.org. (2010). Time-Series. Retrieved nov 25, 2013, from Time Series-subject selection: http://stat.wto.org/Statistical Program/WSDBstatProgramseries.aspx Stearns, P. (2001). The Encyclopedia of World History: Ancient, Medieval, and Modern, Chronologically Arranged. Houghton Mifflin Company. www.wto.org. (2013). International Trade Statistics, 2012. Retrieved November 28, 2013, from www.wto.org: http://www.wto.org/english/res_e/statis_e/its2012_e/its2012_e.pdf
Trade is the most common form of transferring ownership of a product. The concepts are very simple, I give you something (a good or service) and you give me something (a good or service) in return, everyone is happy. However, trade is not limited to two individuals. There are trades that happen outside national borders and we refer to that as international trading. Before a country does international trading, they do research to understand the opportunity costs and marginal costs of their production versus another countries production. Doing this we can increase profit, decrease costs and improve overall trade efficiency. Currently, there are negotiations going on between 11 countries about making a trade agreement called the Trans-Pacific
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The first leg of this trade was merchants from Europe bringing refined goods to Africa to trade for slaves. The merchants traded with chiefs and high authority leaders. The chiefs pretty much could and would trade whomever they
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Free trade was first observed by Adam smith in 1776. “These artificial constraints to free trade are detrimental to a society” (Adam Smith). Until his book was published so many people had different skeptic about free trade. As a result of Adam Smith's book titled Wealth of Nations, free trade achieved an intellectual and rational status supreme to any other principle in the field of economics.
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