Advantages of International Trade

  1. International trade contributions to regional or territorial specialization or division of labour. That is, it helps a country to specialize in the production of goods and services for which it enjoys natural advantages.
  2. By enabling a country to concentrate on the production of those goods for which its resources are best suited, foreign trade facilitates fuller and better utilisation of the available resources.
  3. It enables a country to obtain from other countries goods which it cannot produce or goods which it cannot produce economically.
  4. It helps a country to dispose of goods which it has in surplus.
  5. It widens the market for goods, and thereby, encourages large-scale production, innovation and technical progress, which will contribute to lower costs and lower prices of goods.
  6. By widening the markets for goods, foreign trade contributes to the expansion of domestic industries of a country.
  7. It helps under-developed countries to import plant and machinery and technical know – how required for industrial development from the industrially developed countries.
  8. Foreign trade helps a developing country to procure foreign capital required for economic development.
  9. Foreign trade countries to equilisation of prices throughout the world. In other words, it helps every country to have goods as the same price, of course, making allowance for transport costs, taxes, etc.
  10. Foreign trade i.e., imports, help a country in checking rising prices by increasing the supply of goods.
  11. Competition from foreign goods, resulting from foreign trade, includes domestic producers to become more efficient and to improve the quality of their products.
  12. Foreign trade promoter revolution in transport, in the sense that the desire to take more goods to far off places in less time leads to improved means of transport.


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