Following are the main advantages of international trade :
1. Mutual co-opcration : External trade increases mutual co-operation between different countries of the world It enables a country to obtain those goods which it does not produce or manufacture. Similarly, it can supply it surplus goods to those countries which may be in need of them.
2. Enhances production efficiency :
External trade enables a country to concentrate only on the production of such goods which it can economically and efficiently produce by itself. This results increased productivity and lowering of cost.
3. Increases overall production : Since each of country produces only such goods which it can economically and efficiently produce, hence the overall world production is increased. All factors of production throughout the world are put to best possible use.
4. Better standard of living : External trade enables each country to obtain from the other country or countries the goods which it is not position to produce and thus provides to its citizens all types of goods and services which are necessary for making their life comfortable. This results in a better standard of living.
5. Optimum use of resources : External Trade enables a country to make optimum use of resources—both natural and human. Japan is the living example of such optimum utilization of resources. It depends for its requirements of foodstuffs and raw materials on other countries. It is best equipped for manufacturing of industrial goods which it supplies in abundance at competitive price to other countries.
6. Brings price equalization : In the absence of external trade there would have been wide disparities in the prices of the same goods. However, due to free transfer of goods from one country to another prices are international traded goods are more or less equalized.
7. Use of latest technology : External trade enmables countries of the world to use the latest technology, innovative ideas and benefits of improved production techniques.
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