International Trade; Kenya and China - 1944 Words

THE REASONS WHY COUNTRIES TRADE: THE BENEFITS AND DISADVANTAGES TRADE RELATIONSHIP BETWEEN KENYA AND CHINA: REASONS WHY THE TWO COUNTRIES TRADE Table of content 1.0 International trade 1.1 Reasons why countries trade 1.2 Benefits of trade 1.3 Disadvantages of trade 2.0 Trade relations between Kenya and China 2.1 Volume of trade between kenya and 2.2Reasons for the Trade relations between Kenya and China 3.0 References 1.0 International Trade International trade is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP).Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are†¦show more content†¦Export of goods and services is used as a means to finance imports of those products a country can’t produce within its boarders. II. Exports represent an injection of demand into the circular flow of income III. There is an improvement in economic welfare if countries specialize in the products in which they have a comparative advantage and then trade with other nations IV. Trade allows firms to exploit scale economies by operating in larger markets. Economies of scale lead to lower average costs of production that might be passed onto consumers V. International competition stimulates higher efficiency - particularly for domestic monopolies. VI. Free trade provides greater choice for consumers and competition helps keep prices down. VII. Imports can help to satisfy excess demand from consumers - acting as a safety valve for the economy. A trade deficit during an economic boom helps to reduce demand-pull inflation VIII. Trade in ideas stimulates product and process innovations that generates better products 1.3 Disadvantages of international trade Some disadvantages of trade are; I. Dependence may occur of one country on another. II. Smaller and local countries do not get to enjoy the international trade. III. International trade does not reduce the standard of living; it increases it, for all countries involved. IV. Firms that are not familiar with the tradeShow MoreRelatedInternational Trade Practices : Discuss The Relevance And Application Of The Mercantilist Trade Doctrine Essay1357 Words   |  6 Pagesexamples in Kenya’s international trade practices exhaustively discuss the relevance and application of the mercantilist trade doctrine. Introduction Kenya’s main exports are horticulture and tea (agricultural products are central).other export items include textile coffee, tobacco, cement and many others. Kenya imports mostly machinery and transportation equipment, petroleum products, motor vehicles, iron steel and plastics. 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