International Trade

Benefits of International Trade:

• Obtaining goods you cannot produce domestically (tropical fruit in UK or wine in Indonesia)

• Obtaining goods ( and raw materials) that can be produced cheaper abroad

• Allowing you to specialise and sell abroad

• You can benefit from bigger markets and economies of scale

• Greater consumer choice

• Increased competition leads to increased efficiency and lower prices

• International trade can lead to economic growth and an improvement in the standard of living

Disadvantages of International Trade

• Overspecialisation- what happens if demand falls; what happens if another country is better than you?

• Balance of trade deficit

• (Structural)Unemployment.

• lower economic growth ( more imports=less D for domestic output)

• environmental impact

Reasons for Protectionism