International Trade Debate II
Well, the debate over unrestricted international trade is likely to keep economists on their toe that is for sure. Though there are several advantages as well as disadvantages to unrestricted international trade, of course in most cases the advantages do outweigh the disadvantages. Therefore, unrestricted international trade would appear to be more likely to be advantageous to all countries involved from my understanding.
See, the principle of comparative advantage explains how international trade can be profitable for different countries to continue taking part in unrestricted international trade especially when one country has lower cost involved in producing a specific good. An absolute advantage would go to the country that can produce a good at lower cost.
Opportunity cost would benefit each country that is able to forgo production of one good to produce another good at lower cost. Comparative cost would benefit all countries able specialize in production of a good at lower cost in comparison to another country.
When each country specializes in production of goods at lower cost, total production in the economy rises, and each country benefits from international trade through lower cost of goods (Mankiw, N., (2004).
It was concluded by Adam Smith that the principals of comparative advantage bring several gains to countries involved in unrestricted international trade (Mankiw, N., (2004). So, unrestricted international trade allows for the condition of superior products at lower production and consumer cost in all countries involved. In turn, lower production costs lead to increased competition between countries to improve production standards and increase production performance to maintain competitive prices. So, each country gains political and economical advantages through unrestricted international trade.
To sum it up, one good can produced by another for a lower cost, then I believe it should depending on the benefits. Not...