INTERNATIONAL TRADE International Trade Simulation and Report

International Trade Simulation and Report

Introduction

In international trade, the country prefers to use for its own benefit and profit in the full use of the impact of costs associated with import and export of goods and services. The ideal situation for a country participating in international trade will roll out specialist products that can be efficiently produced and imported products, which are produced under similar circumstances. This creates a reasonable cost of goods that are desirable for other countries. (Suranovic, 2008) This article will discuss the advantages and limitations of international trade and identify four key points emphasized in the reading assignments, and simulation.

Limitations and Advantages of International Trade

International trade is the exchange of capital, goods and services across international borders or territories. (Wikipedia) is a simplified definition when considering the enormity of sharing among economies in the world. Exports, goods and services sold abroad, and imports, goods and services purchased from foreign sources, are part of the balancing act that must be constant monitoring to ensure the internal and the national economy remains healthy.

Mankiw (2007) states that the value of the nation's trade balance AO exports minus the value of its imports. Maintaining a balance between imports and exports is important for the nation, AO growth. The key is to find people the desire of both parties. This makes no sense to produce, export and trade of electronics, when the country you want to trade with developing and manufacturing the same products. The study shows that other countries need and put forward a plan that allows both parties to purchase goods and services required.

Benefits for international trade are obvious when the public wants a good thing that cannot be produced locally. A good example would be coffee. Climate needed to grow good coffee beans can only be found in the southern hemisphere, in particular, Colombia, South America. United States citizens enjoy and are willing to pay for coffee, so the trade opens up between the two countries. Colombia wants technology and desires to purchase computers. When the two countries make trade agreement, all parties will be happy. Rigid part of maintaining a balance to ensure that neither America nor Colombia, SA's economy suffers losses from exchange.

Three main factors cause restriction on international trade: transaction costs, terms of trade and protectionism. Transaction costs are high because of transportation costs, and easy to deal with foreign markets. Terms and conditions for trade, is determined by the course, limited to the boundaries of comparative advantage. Finally, protectionism, trade restrictions for national security, increasing job losses due to moving companies overseas trade framework established to protect small local businesses and unfair foreign competition, which includes burial.

Absolute advantage applies to countries, regions, or a company that produces goods or services at a lower price than per unit price at which any other entity produces that good or service. For example a person with an absolute advantage can produce something using fewer inputs than the other side produces the same ...