29. International Trade Efficiency

All of the economic theories of international trade suggest that it enhances (збільшувати, посилювати) efficiency. Some of the efficiency is due to (завдяки, через те, що) comparative (порівняльні) advantage, as in the Ricardo and Heckscher-Ohlin theories. In addition, some efficiency comes from taking advantage of increasing returns.

Trade based on comparative advantage should tend to (мати тенденцію; схилятися) benefit small countries more than large countries. That is because the benefits of comparative advantage are proportional to the difference between the relative (порівняльні, відносні) prices in world markets and the relative prices that would prevail (переважати; панувати) in home markets without trade. If that difference is large, then a country earns a large advantage from trade. If that difference is small, then there is only a small advantage from trade. Small countries are more likely than large countries to find that relative prices in the world market differ significantly (значно) from what would prevail in their home markets.

Another benefit from trade is that it promotes (сприяти) dynamism and innovation within an economy. Improvements (покращення) in manufacturing quality and productivity in the United States in recent decades have been credited (приписувати, зараховувати), in part, to the pressure of competition from Japan and elsewhere.

An economy that is closed to trade is one in which inefficient industries and laggard( повільний, відстаючий) firms are well protected. In fact, studies suggest that barriers to trade are a major cause of extreme underdevelopment (вкрай недостатній розвиток). The countries that are most closed to trade tend to be the poorest in the world. Countries that have reduced trade barriers and increased the share of imports and exports in their economies tend to be among the fastest-growing nations.

30. Barriers on international trade (Обмеження на міжнародну торгівлю)

Nations trade with one another for the same reason that individuals and business firm within a country trade: both sides expect to benefit from the transaction. They benefit because trade enables them to exchange things they don’t need for the things they do need and want.

Manufacturing can also be performed more efficiently in some parts of our country than in other. Natural resources, labor supply and transportation facilities have promoted the development of certain industries in particular regions of the country.

Differences in terms of climate, natural resources, labor supply, capital and technology make it possible to specialize in the production of some products. Despite the many advantages of trade between nations, most countries, including our own, often restrict that trade in a number of ways.

The firs are tariffs. Tariff is a duty, or tax, on imports. There are two basic types of tariffs. Revenue tariffs are levied as a way to raise money. Protective tariffs are levied to protect a domestic industry from foreign competition.

Than quotas. Quotas limit the amount of foreign competition a protected industry will have to face.

There are many other devices that directly affect the flow of trade among nations. Expect subsidy – a payment by a country to its exporters that enables them to sell their products abroad at a lower price than they could sell them for at home. Selling the same product for a lower price abroad than at home is called dumping. “Administrative red tape” – the deliberate use of governmental rules and regulations to make it difficult to import goods from abroad.