Reasons for Trade

贡献者:Equipluve 类别:英文 时间:2020-05-23 22:36:36 收藏数:6 评分:0
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Trade can leave everyone better off. People trade because they don’t have everything they need. Anci
ent people exchanged their goods and services without the benefit of a medium of exchange, such as m
oney. This system of exchange is called the barter system. Clear evidence of trading over long dista
nces dates back at least 9,000 years, though it may go back much further to the domestication of pac
k animals and the invention of ships. Trade in the modern sense comes from the division of labor and
specialization. Division of labor makes trade possible and specialization can generate further bene
fits in terms of efficiency and productivity.
Today, international trade is at the heart of the global economy and is responsible for much of the
development and prosperity of the modern industrialized world. One point upon which most economists
agree is that trade among nations makes the world better off. The main reasons for international tra
de are differences in technology, differences in factor endowments, differences in demand, the prese
nce of economies of scale, and the presence of government policies.
However,international trade can be one of the most contentious of political issues, both domesticall
y and between governments. Trade among nations may be taken as a sign of good intent and a means of
maintaining non-hostile diplomatic relations. Trade is used to empower allied nations by providing t
hem with valued resources such as oil, grain, or bullet. Trade may also cripple and weaken rivals by
imposing economic sanctions on goods & services such as military armaments, food, or medicine. Case
in point, the US is currently imposing sanctions on Iran.
Famous trade theories include Adam Smith’s absolute advantage theory, the theory of comparative adva
ntage by David Ricardo, the H-O theorem, the Economies of Scale by Paul Krugman, and the theory of
monopolistic competition by Edward Chamberlin.
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