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Unrestricted Cross-border Trade International trade can be defined as the exchange of goods services or capital between two interested parties located within different national boundaries A number of factors may explain why countries potentially gain from trade including differences in absolute and comparative advantage differences in resource endowments or demand patterns economies of scale effects and the possible benefits of increased competition There are also a number of factors that may explain why a country may benefit from restricting international trade One of the possible problems with free trade is that a country may become locked into the production of commodities in which it currently enjoys a comparative advantage rather trying to develop industries in which it may be able to develop a comparative advantage over time Indeed a newly industrializing country may be unable to have any indigenous industrialization at all unless it can protect its infant industries for some time against unbridled international competition Let me list an example of Australia Australia is a relatively small country with its own resources So therefore Australia must engage in international trade in order to receive resources from other countries that cannot be obtained in Australia So to even up the distribution of resources it is extremely to import and export with other nations all around the world The reasons for importing are as follows 1Goods are usually cheaper andor of higher quality 2The goods can be produced but not in sufficient quantities to satisfy consumers demands 3If a nation does not contain either the resources or the technology necessary to provide a certain commodity there will be greater demand for it The reasons for exporting are 1A rise in employment levels 2Export orientated industries will grow in size 3Firms within export industries will probably become more profitable Absolute Vs Comparative advantage Two major concepts used to explain international trade patterns are 1 Absolute advantage 2 Comparative advantage A country
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