International trade and world output


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International trade and world output

  1. 1. International Trade International Trade and World Output Prof. Ryan Repich Introduction to International Business MGMT220-1201A-04 AIUOnline Victoria Rock January 15, 2012 Page 1
  2. 2. International Trade ABSTRACTThis work describes the relationship between international trade and world output. Therelationship between supply and demand, world output and international trade asdiscussed and examples are provided for specific counties such as the United States andEurope. Page 2
  3. 3. International Trade INTRODUCTIONInternational trade is the exchange of products around the world through imports andexports that allows consumers around the world to obtain products and services that theycannot obtain in their own countries. If international trading was to stop, each countrywould suffer many losses which I hope to explain in this paper. Page 3
  4. 4. International Trade RELATION BETWEEN INTERNATIONAL TRADE AND WORLD OUTPUT In order to understand the relation between international trade and world output, weneed to understand what each is first. International trade is the purchase, sale, orexchange of goods and services across national borders. World output is the goods orservices produced by countries around the world.(International Trade) From these termswe can see how the relation between international trade and world output go hand in handwith one another. International trade is important not only for the country exporting the goods, but alsofor the country importing the goods. This relationship not only provides a greater choicefor goods for consumers for the importing country, but also provides for job creation inthe exporting country. International trade is affected by world output in a supply anddemand type of relationship. If the world output is low, then trade will be low as well.The same goes for if world output is high, then trade will also be high, however though,the pace of increase or decrease may not be the same. One example would be in times ofeconomic recession, people will not purchase as many products as they would ifcomfortable about their financial and personal future.(Motley, 2005) BROAD PATTERN OF INTERNATIONAL TRADE Trade patterns are viewed by examining trade and world output, providing insight ontrade patterns and possible future growth. However, it does not define who is tradingwith whom in terms of high-income and low-income nations. Through the informativerecords from customs, although sometimes misleading because governmentsinternationally alter the reporting of trade when it is related to military equipment andother sensitive material, we know that trade between wealthy economies make up forsixty percent of world trade, middle income nations is about thirty-four percent and lowincome nations trade is about six percent.(Motley, 2005) WHAT WOULD HAPPEN IF TRADE DIDN’T EXIST? If trade didn’t exist the United States as well as every nation would be devastated. Injust looking around my own home I can see several things that I would not have if itwasn’t for trade among nations. The tv I watch, the phone I get calls on, the computer I Page 4
  5. 5. International Tradedo my school on, certain foods that my daughter and I enjoy, as well as the clothshanging in our closets all come from trades from other countries. Basically the standardof living that we enjoy and take for granted would go downhill fast. Without trade,products like gasoline would double and maybe even triple in price due to the fact thatsixty percent of our oil comes from other countries. Prices would skyrocket because ofthe lack of access to the cheaper goods we now get from other countries.(Reynolds, 2011)Europe would lose American made cars that they enjoy driving if trade was stoppedbetween the United States and Europe. Other products would be Angus beef as well asmany different types of cereals and cereal preparation equipment, not to mention whatEurope would be without due to no trade to other countries.(Motley, 2005) Page 5
  6. 6. International Trade CONCLUSION No matter how you look at it, trade is very important to every country in every aspect.Without trade, choices would be fewer and more expensive if at all available. Nationswould go into deep recessions and ultimately become full of poor and hungry people. Ienjoy the benefits that trade to other countries provide and don’t want to find out whatlife would be like without it. Page 6
  7. 7. International Trade REFERENCEInternational Trade. (n.d.). Retrieved from Wikipedia: The free encyclopedia:, L. (2005, December 9). International Trade: What is it Realy? Retrieved from Voices:Yahoo-Business: 12469.html?cat=3Reynolds, K. (2011, May 5). What if you had to buy American? Retrieved from MSN.Money: Page 7