Do Countries Benefit from International Trade?

Paper Summary:

The paper discusses how international trade has become the backbone of our modern, commercial world, in which producers in various countries profit from an expanded global market. The paper relates that, on the one hand, international trade has lifted large populations out of poverty as the theory of comparative advantage is put into practice by more people across the world. The paper also explains, however that, on the other hand, globalization of world trade has also resulted in serious problems such as growing socio-economic inequality and an "asymmetrical" growth of economies.

From the Paper:

"Adam Smith demonstrated in his Magnus opus, "The Wealth of Nations," way back in 1776, that individuals would be better off if they specialize, instead of trying to be economically self-sufficient. He also suggested that the same principle can be applied to international trade, i.e., countries can exchange the products and services that they are relatively good at producing for those things that other countries are relatively better at producing for mutual benefit. David Ricardo (1772-1823), British economist and businessman, went a step further in extolling the virtues of International trade through his theory of Comparative Advantage by suggesting that it can be beneficial for two countries to trade, even if one of them is able to produce each item more cheaply than the other. Despite these theories, the subject of globalized trade still invites controversy. Let us see whether countries really benefit from international trade."

Sample of Sources Used:

• Dollar, D. and Kraay, A. (2001). "Trade, Growth, and Poverty." Development Research Group: The World Bank. Retrieved on June 9, 2007 from http://econ.worldbank.org/files/2207_wps2615.pdf
• "Liberalization and Globalization: Maximising the Benefits of International Trade and Investment." (2004). DTI Economics paper No. 10. Retrieved on June 9, 2007 from http://www.dti.gov.uk/files/file14763.pdf
• Nordstrom, H. and Vaughan, S. (1999) "Trade and Environment." Special Study: World Trade Organization. Retrieved on June 9, 2007 from http://www.wto.org/english/tratop_e/envir_e/environment.pdf
• Prestowitz, C. (2006). "The World is Tilted." Newsweek International: Special Edition, December 2005-February 2006.
• Vogel, D. (2007). "The Case for Free Trade." Side bar: Encyclopedia Encarta Online. Retrieved on June 9, 2007 from http://encarta.msn.com/encnet/refpages/RefAuxArt.aspx?refid=461578139

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