Essay: Studies of Economics make to the extension of world trade

”
What contributions can studies of Economics make to the extension of world trade?

One of the main aims of all human activity is the satisfaction of certain basic needs for survival, the most fundamental of which are food and water. Of these, more difficult to obtain is food, unlike water, it does not come from the clouds. To obtain it men have to exert all their energies, mental and physical. It is this search for food that has lead to the development of international trade which now extends to all commodities, including luxuries.

The idea of world trade is of recent origin. International trade began to expand rapidly only after the Industrial Revolution, when men developed the devices for world communication and realized the necessity for obtaining the products of other countries. With the expansion of world trade, the study of Economics became of much importance to those engaged in international trade and commerce. Today, this subject is taught in all the universities and other institutions of learning throughout the world, for it has come to be realized that the study of Economies could lead to the extension of world trade by revealing new advantages of such trade.

From a study of Economics, together with Geography, it has come to be known that almost every country in the world lacks the geographical and geological conditions for the production of certain commodities. A country in which food can be grown in abundance may not be able to produce manufactured goods, and a country which is rich in mineral deposits and has the skills for the manufacture of goods, may not be able to produce food, owing to the absence of certain geographical advantages. Therefore, each country has realized the benefits of participating in world trade.

Studies of Economics have also revealed the wisdom for each country to concentrate on the production of only certain commodities, even though it has the resources for the production of many other goods. Malaysia, for example, could produce mote rice for its people in stead of depending on other countries for it; but it is appreciated that it is more advantageous for her to concentrate on the production of other goods such as rubber and tin. In the same way, many of the industrial countries in Europe could produce more food crops; but they too have realized the advantages of importing good and expanding their resources on the manufacture of goods which many of the other countries require.

This tendency on the part of the countries of the world to produce goods in which they have comparative advantages over others has led to the division of labor on an international scale. Each country specializes in the production of certain commodities and imports other commodities which other countries can produce more skillfully and advantageously. Though such an arrangement sometimes operates to the disadvantage of some countries, especially in times of war when communications is disrupted, yet it has been noted that it is still an advantage to maintain this position, for today there are enough means of averting the commercial disadvantages of war which, fortunately, does not occur too frequently. Even a cursory study of Economics would reveal the advantages of participating in world trade, on the part of the various countries of the world. It could therefore be argued that studies of Economics could make a great contribution to the extension of world trade.”