Trade

Why Nations Trade

This question is raised in view that strong economies have the ability to produce locally what they import from other countries. For instance, most of the electronics that America gets from Japan, can be manufactured locally or the agricultural products like wheat or corn, ready made goods, aircrafts and others that Japan imports from America can also be produced by Japan locally (EcEdWeb Economics Lesson, n.d). This scenario is found to cause conflict to exist between local and foreign trade but to resolve the situation, allowing global trade to exists in terms of each country maintaining its comparative advantage seems to enable countries realize a significant economic growth at the national level than when they focus on producing all what is needed by the nationals locally. Moreover, specialized production allows countries to become more efficient and subsequently, consumption level is increased due to the high quality of production made. In light of this, free trade is said to have been established to improve this ideal of global trading by creating more markets for products and services while at the same time to lower market prices of these goods (Chmielewski, 2015).

The economic concept of comparative advantage at the international markets and free trade is found to differ with protectionism concept. The comparative and absolute trade advantage system is found to be weakened by a number of facts: (a) that no single country happens to focus solely on production specialization of a product that it chooses to export. In fact, all countries produce at some point what other countries produce (b) that small countries have the potential of producing much better products but are unable to find foreign markets or even ship products to the targeted markets (c) many believe that importing goods that can be produced locally hinders the growth of local productions and this often leads to loss of local jobs. Hence, in response to these factors, some governments considered protectionism as a means to ensure growth of local industries and job security. In the presence of free trade, these countries are found to practice protectionism by: (a) lowering market prices of locally manufactured goods and (b) imposing trade tariffs of competitive foreign goods (Economics Online, 2015; Globalization 101, 2015).

How Trade Has Influenced History

The impacts of trade in history are concentrated on the development of the market place where people from all walk of life meet and exchange each other’s differences. These differences are presented in form of ideas, culture, products, and others are transferred at the market place for the sole purpose of improving human life. At the market place, business men opt to take risks, work with delays but ultimately in hope to make reasonable profits. This aspect of trade, which is improving human life with a variety of products made this activity an important part of human life from the ancient times and how people have traded has been evolving with time. Another important contribution of trade in history is how certain commodities through trade connected world as a whole from the early days and which made their producers quite wealthy. Such commodities are mentioned to include silver, gold, slaves, and agricultural products like tobacco, sugar, and others. Due to the value attached to these products, their extensive trade resulted to intensive exploitations which left devastating effects on the communities that produced them. For instance, the mining of gold and silver resulted to increased loss of life of miners, introduced new trade routes, creation of local currencies, influenced a rapid growth rate of cities, and others. Slave trade on the other hand that emerged as a need of having laborers work on Whites’ farmlands and which also was facilitated by colonization of the African continent as a result of trade demands also has had a significant contribution in history. That is since the colonial days, African’s have been seen as an inferior community by the Whites. This has played a critical role in sustaining racialism especially in developed countries like America where the Black people whose ancestors were slaves have suffered discrimination for the longest period of time now (Bridging World History, 2013).

References

Bridging World History (2013). Unit 15: Early Global Commodities. Retrievedhttp://www.learner.org/courses/worldhistory/unit_video_15-3.html.

Chmielewski, T. (2015). Free Trade vs. Protectionism. Retrieved< http://smallbusiness.chron.com/trade-vs-protectionism-3830.html>.

EcEdWeb Economics Lesson (n.d). Why Nations Trade. Retrieved< http://ecedweb.unomaha.edu/lessons/FEOG1.htm>.

Economics Online (2015). Why do Countries Trade? Retrieved< http://www.economicsonline.co.uk/Global_economics/Why_do_countries_trade.html>.

Globalization 101 (2015). Comparative Advantages versus Absolute Advantage. Retrieved< http://www.globalization101.org/comparative-advantage-versus-absolute-advantage/>.