16 - GAINING FROM INTERNATIONAL TRADE

Abstract

This chapter discusses the impact of foreign trade on the price, consumption, and domestic production of goods. The effects of trade restrictions, such as tariffs and quotas, are also considered in the chapter. International trade is an area of economics where fallacies seem to abound. The chapter also discusses several examples of economic non-reasoning. International trade, like other voluntary exchange, results because both the buyer and the seller gain from it. If both parties did not expect to gain, there would be no trade. Exports and imports are closely linked. Nations export goods to others so they would be able to import foreign products. Exports provide the buying power that makes it possible for a nation to import other goods. As a secondary effect, policies that restrict imports simultaneously reduce the ability of foreigners to purchase the export products of a nation.