Inflation
In a country where the inflation rate is increasing compared to the countries of its trading destination, transactions are expected to decline. However, this is considered normal. Consumers and companies in that country are likely to buy more goods abroad (due to high local inflation), while the country’s exports to other countries will decline.
There is a free market
Economic freedom or liberalism has begun to be implanted in international trade. This gives everyone the right to increase and expand their market to buy and sell products across countries. The free market is needed to increase cooperation between countries which has the opportunity to increase state revenue. Economic freedom triggers individuals and groups to compete to increase markets and increase production.
Differences in geographic conditions
Every country has a different geographical situation with other countries, which will cause differences in the resources produced. This condition makes each country unable to meet all the required resources so that it is necessary to make exchanges with other countries.
Difference in technology
Not only differences in natural resources, differences in human resources can also cause differences in capabilities in terms of technology. This technological difference causes a country, which can only produce raw goods, to export to other countries to be processed and imported back to the country at a higher price. Likewise, if a country is only advanced in technology without a supply of natural resources, they need help from other countries. This is the role of a mutually beneficial form of international trade.
government policy
The government of a country can have a big influence on its trade balance, from policies regarding exporters’ subsidies, import restrictions, to the lack of enforcement of laws against piracy. This will clearly affect international trade.
International Trade Benefits
Job opportunities are wide open
The first benefit of international trade is the opening of very wide job opportunities. This is because international trade helps generate more jobs through the development of new industries to meet product demand in various countries.
This condition will certainly help countries reduce the unemployment rate. That way, for someone who hasn’t got a job, it will be easier to get a job.
Expanding markets and increasing income
The next benefit of international trade is to increase the market for the company. This is done by producing optimally, without fear of overproduction and falling selling prices. With the existence of international trade, entrepreneurs can run their production machines to the maximum and sell the excess products produced abroad. That way, high productivity will increase income.
Make good relations between countries
Another benefit that can be felt from international trade is the establishment of good relations between countries. The participating countries will certainly establish good relations. After that, other cooperation can also be carried out by the country.
Increase the prosperity of a country
International trade also has an important role in increasing the income of each country concerned. This is because countries with advantages and disadvantages of an item can sell and obtain the goods they need. The existence of international trade activities will make needs met and increase income. That way, an increase in state income will increase the prosperity of a country concerned.
The needs of life are easier to fulfill
The existence of international trade will also make it easier for each country to meet their needs that are not produced by that country. This is because each country must have its own wealth of resources. Starting from geographical conditions, climate, the level of science and technology mastery, and so forth. This can later be developed by producing products in each country.
