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INTERNATIONAL TRADE, Different countries, different factor endowment,…
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- Different countries, different factor endowment
- Through trade fairs, economic co-operation and cultural exchanges
- Many country still imports goods although they also producing those goods
- Income from exporting goods to foreign market lead to economic growth
- Importing goods from other countries reduce possibility of a producer to monopolises certain production of good in the domestic market
- Firms enjoy economic of scale when production is large
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- restriction / limitation on the volume of imports
- government provide subsidies in the production of local goods
- government restricting the supply of foreign currency in the country
- government-mandated sanction that restricts trade with a foreign county
- must be some restrictions on import made by a country as to much import can worsen the balance of payments where payments is higher than receipts
- the imposition of some protectionism tools such as tariffs and taxes on imported goods will give revenue to government
- protectionism act as a shelter for infant industry to grow first
- protectionism will promote the expenditure on domestic goods and level of employment in the country can be increased
- with some restrictions on trade, local producers may grow and are induced to produce variety of goods in the economy