The main advantages of international trade to a country are as follows:
(i) Economy in the Use of Productive Resources: Each country tries
to produce those goods in which it is best suited. As the resources of each
country are fully exploited, there is thus a great economy in the use of
(ii) Wider Range of Commodities: International trade makes it
possible for each country to enjoy wider range of commodities than what is
otherwise open to it. The commodities which can be produced at home at
relatively higher cost can be brought from the cheaper market from abroad and
the resources of the country thus saved can be better employed for the
production of other commodities in which it is comparatively better fitted.
(iii) Scarcity of Commodities: If at any time there is shortage of food or
scarcity of other essential commodities in the country, they can be easily
imported from other countries and thus the country can be saved from shortage of
commodities and low standard of living.
(iv) Promotes Competition: International trade promotes competition
among different countries. The producers in home country, being afraid of the
foreign competition, keep the prices of their products at reasonable level.
(v) Speedy Industrialization: International trade enables a
backward country to acquire skill, machinery; and other capita! equipment from
industrially advanced countries for speeding up industrialization.
(vi) Fall of Prices: A country can export her surplus products to a
country which is in need of them. The home prices are, thus, prevented from
(vii) Extension of Means of Transport: When goods are exchanged from
one county to another, it leads to an extension of the means of communication
(viii) Economic Inter-Dependence: International trade offers
facilities to the citizens of every country to come in contact with one another.
|t makes them realize that no country in the world is self-sufficient. It thus
pro motes peace and goodwill among nations.
International trade has its own demerits/disadvantages. These, in brief are as follows:
(i) Exhaustion of Resources: In order to earn present export
advantages a country may exploit her limited natural resources beyond proper
limits. This may lead to exhaustion of essential material resources like iron,
coal, oil, etc. The future generation thus stands at a disadvantage.
(ii) Effect on Domestic Industries:
If no restrictions are placed on
the foreign trade, it may ruin the domestic industries and cause widespread
distress among the people.
(iii) Effect on Consumption Habits: Sometimes it so happens that the traders
in order to make profits import commodities which are very harmful and injurious
to the people For instance, if opium, wine, etc., are imported, it will
adversely affect the health and morale of the people.
(iv) Times of Emergency: If each country specializes in the
production of those commodities in which it has comparative advantage over other
countries, it may prove very dangerous rather fatal during times of emergency
tike war. The country may not be able to get essential supplies Thus the whole
economy may be crippled.
(v) Provides Foothold to the Foreigners: Foreign trade provides
foothold to the foreigners in the country. It is in fact a pretext for a thorough
political and economic subjugation of the weak by the powerful country Pakistan
and India cannot forget as to how the Britishers came under the garb of traders
We cannot deny this fact that international trade has certain evil
consequences but if it is properly controlled, it can prove very beneficial for
all the countries of the world.