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  Advanteges and Disadvantages of International Trade

Advantages of International Trade

a) Greater variety of goods available for consumption.

b) Efficient allocation and better utilisation of resources since countries tend to produce goods in which they have a comparative advantage.

c) Promotes efficiency in production as countries will try to adopt better method of production to keep costs down in order to remain competitive.

d) More employment could be generated as the market for the countries’ goods widens through trade.

Disadvantages of International Trade

a) It could lead to a more rapid depletion of exhaustible natural resources.

b) A country could become heavily dependent on other countries

c) Domestic industries are exposed to foreign competition and ‘dumping’ of cheap foreign products and this may cause unemployment if these industries are unable to compete with cheaper imports.

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