Xec0212

International Trade

Stimulation

XECO212

May 9, 2012

International trade is an important part of a countries ability to increase the economy. It would be worthy for the president of Rodamia to use international trade to help the economy of the country. The reasons to open any countries borders is to open the market, so consumers have a bigger market in terms of quantity and price to choose from. A country can import products that are manufactured more efficiently with other countries. This gives the domestic market more room to expand their markets to other countries and to open up new opportunities for investing. All of this makes the economy more stable. With the modern technology and industrialization, international trade has been a common trend and will continue to grow.

The greatest partners that Rodamia could trade with are the three surrounding countries of Suntize, Alfanzia, and Uthania. All three of them have something to trade in the international market. Let’s look at what commodities to export and what commodities to import with our neighboring countries. We need to take in consideration the Trade Commission Report before making the trade. The Trade Commission Report states that we should give incentives to those commodities that have a lower opportunity cost of production in Rodamia. We should consider trading with Alfazia because of their commodities like cheese and corn. With electronic goods like DVD players and MP3 players, we should look at Uthania and Suntize. We should be considering the opportunity cost of production when determining what commodities to export and import. Opportunity cost defined is the benefit foregone by doing a particular activity.

A great motivator for international trade is comparative advantage. Comparative advantage is the ability of a country to produce a particular good or service at a lower opportunity cost than another country. This would also include producing goods with the highest efficiency...