Economics of International Trade

• Economics of International Trade examines how countries exchange goods and services and how these exchanges impact economic growth and welfare.
• It explores why nations specialize in certain products based on their resources, technology, and comparative advantages.
• A central idea in international trade economics is that countries benefit by focusing on what they produce most efficiently.
• Trade theories—such as comparative advantage, Heckscher-Ohlin, and new trade theory—explain global patterns of production and exchange.
• International trade influences prices, wages, employment levels, and income distribution within countries.
• Governments use tools like tariffs, quotas, and subsidies to regulate trade and protect domestic industries.
• Trade agreements and international organizations, such as the WTO, help reduce barriers and facilitate global commerce.
• Global supply chains and multinational corporations play a major role in shaping modern trade flows.
• Economic models help assess the effects of trade on competitiveness, innovation, and consumer choice.
• As global interdependence increases, the economics of international trade remains essential for understanding market dynamics and policy decisions.