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Who benefits from global trade and how international trade can affect the economy?

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Aug 23, 2019
Who benefits from global trade and how international trade can affect the economy?

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Lina T.
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Aug 23, 2019
To say briefly, trade provides direct and indirect benefits, on the micro-level and macro-level. For example, when a company can export its products to foreign countries, it has a bigger potential market. Consequently, it can produce more, sell more, earn more money and deliver more profits to its owners (direct benefits). At the same time, the ability to sell more results in a need to employ more staff across all job roles (production, finance, sales, HR, …). This provides jobs and reduces unemployment, thus offering indirect benefits to society. Similarly, the company will be paying more taxes (as its profits increase), and the local government will have to pay fewer unemployment benefits (because fewer people will be unemployed). These are indirect benefits for society. When many companies benefit from exports, and the indirect benefits of export accumulate, we talk about “economic development”, or “economic growth”. Import has its benefits too. First, it gives citizens access to products that they would otherwise not have. Second, it allows companies to produce products even if they do not have all the necessary components or raw materials (by importing them). When goods are imported, often taxes and import duties are collected, and hence imports contribute to the income of Government. These tax incomes are subsequently used by the Government to invest in social programs, in infrastructure and more. These are indirect benefits for society.
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