Surname 1

Student’s name

Course

Tutor

Date

International Trade

International trade has transformed the global economy. It has contributed positively to

the increase in employment opportunities in many countries and increased the variety of goods

available in different countries. However, international trade has contributed to the rise in

income inequality and increase overdependence on foreign firms. These demerits have made

some people develop a mechanism of minimizing the negative impact of globalization.

International trade encourages specialization, and this leads to an increase in the level of

production. The increasing output spurs economic growth and helps in the creation of

employment opportunities (Amadeo). The availability of employment opportunities decrease

dependency ration and increase household income. Besides, globalization enables different firms

to offer their products to consumers in different countries. This increases the variety of goods

and competition. In the long run, consumers benefit because the competing firms increase the

quality of products and reduce prices (Mankiw).

International trade has led to an increase in income inequalities. The ability of firms to

shift firms to countries with abduct labor decreases the bargaining power of unions. The situation

has led to a slow increase in wages in developed countries (Mankiw). At the same time, wealthy

shareholders earn high returns. Finally, international trade encourages specialization, and this
 Surname 2

encourages countries to depend on foreign firms to provide some of the essential products and

services. The dependency on foreign firms increases the risk of a decrease in supply during the

period of political differences (Ayres).

International trade increases productivity and creation of jobs. It also increases a variety

of commodities available to consumers. However, it encourages over-dependency on foreign

firms and increases income inequalities. The various merits indicate that international trade

should be encouraged, but countries should put in place a mechanism of minimizing the negative

implications.
 Surname 3

References

Amadeo, Kimberly. “4 Reasons Why International Trade Is Slowing.” The Balance, 2013,

www.thebalance.com/international-trade-pros-cons-effect-on-economy-3305579.

Ayres, Crystal. “12 Advantages and Disadvantages of International Trade.” Vittana.org, 2015,

vittana.org/12-advantages-and-disadvantages-of-international-trade.

Mankiw, N. Gregory. “Why Economists Are Worried About International Trade.” The New York

Times, The New York Times, 16 Feb. 2018,

www.nytimes.com/2018/02/16/business/trump-economists-trade-tariffs.html.