The Benefits and Costs of International Trade

International trade has been applied as the most aspect used to spur economic growth in different countries. The effectiveness of international trade has different perceptions of economists. These differences originate from the consequences of global trade experienced by developing and developed countries. For instance, developed countries appear to be experiencing the benefits of trade liberalization through GDP Growth. The positive benefits of the international trade originating from the idea of dynamic demand (Grossman, Helpman, & Kircher, 2017). Global trade results in decline of tariffs and trade barriers, thus increasing the flow of goods. As a result, a country will be allowed to consume products outside its production. Protectionists argue that international trade increases the rate at which developing countries export materials of low value. 

Objective: This paper focuses on analyzing the benefits and costs of international trade, thus providing recommendations to reduce the adverse effects of international trade. 

Data Collection 

Data used in this paper is obtained from records of changes in tariffs for Pakistan for over 29 years since the year 1980. This information is presented in table A in the appendix. The data used in analyzing the effects of international trade focuses on the changes witnessed in terms of business from the year 1980 to 2010 (Hasan, 2010). The data collected emphasizes on changes of tariffs and turns seen in the volume of trade and GDP growth ratios. 

Findings 

The average rate tariff was 22.6% over from the year 1980-1981 and significantly dropped from to 13.8% by the year 2010. The volume of trade has also been increasing, reflecting the average rate of 29.9% GDP ratio over the study period (Hasan, 2010). The GDP for Pakistan has not been stable, reflecting some weaknesses of engaging in international trade. During the selected period of 29 years, the GDP has been increasing at a rate of 5.3% (Hasan, 2010). The period between 2008 and 2009, Pakistan exported approximately 53% with 17% of the total exports comprising of textile manufactured products. The GDP growth rate experiences variation reaching at the rate of 2.1% by the end of the year 2008. 

Discussion 

International trade creates a room for a decrease in tariffs and other trade barriers, thus increasing the volume of exports. This information indicates that trade internationalization creates an opportunity for a country to export its products to foreign countries, thus increasing the level of employment and GDP growth. Increased level of international trade indicates that trade opens to more opportunities for traders in the international level. Other terms of trade increase accessibility to jobs, thus creating economic growth (Grossman, Helpman, & Kircher, 2017). Terms of trade in Pakistan show a falling economic trend in other terms of business. For instance, Pakistan exports experience a decline in value of the level of Pakistan exports in the world market. These challenges arise as a result of a decline in other aspects needed in trade, such as the level of exports and less creation of funds needed in research and development programs. The fall in the value of the products and lagging in technological advancements explains the differences in consequences of international trade in different countries. 

Suggestions and Summary 

The adverse impacts of international trade indicate that there is a need for increased management of trade liberalization so that there may be equality in the dynamic gains from international trade. For instance, trade liberalization needs to be conducted following a strict guideline by the government. This information calls for a need for supervision and policy development, thus increasing the level of benefits received from international trade (Grossman, Helpman, & Kircher, 2017). There are arguments that less developed countries enter into a trade agreement with developed nations to avoid the level of exploitation. Developed nations tend to influence the policies and agreements made by international trade organizations such as World Trade Organizations. Consequently, less developed countries with less advanced industries such as Pakistan continue experiencing competition from developed nations. 

References 

Grossman, G. M., Helpman, E., & Kircher, P. (2017). Matching, sorting, and the distributional effects of international trade. Journal of political economy, 125(1), 224-264. 

Hasan, A. (2010). Costs and benefits of trade liberalization. Department of Economics University of Karachi 

VanHoose, D., & Daniels, J. P. (2017). Global economic issues and policies. Routledge. 

Appendix 

Table A: statistics results for economic growth rate for Pakistan as a result of trade Liberalization