Benefits of international trade
This lesson introduces the concept of international benefit and looks at the benefits of international trade. I would advise you to begin this lesson by starting with the question: how do your students believe their own country has benefited from international trade? Another activity is to ask your class to list all of the goods they currently have with them - clothes, shoes, mobile phone e.t.c. Then separate these goods into domestically produced and imported goods. They may be surprised at just how many of their possessions are imported from overseas.
Lesson time: 40 minutes
Explain that gains from trade include lower prices for consumers, greater choice for consumers, the ability of producers to benefit from economies of scale, the ability to acquire needed resources, a more efficient allocation of resources, increased competition, and a source of foreign exchange.
International trade - the exchange of all goods and services between one country and another.
Free trade - a trade policy that does not restrict imports or exports; it can also be understood as the free market idea applied to international trade.
Opportunity cost - the next best option foregone, so if a nation decides to specialise in the production of one good or service, they use up resources which will prevent them from using them in the production of another.
Comparative advantage - an economic term that refers to an economy's ability to produce goods and services at a lower opportunity cost than that of trade partners.
The activities on this page are available as a PDF file at: Benefits of international trade
Begin by showing the following presentation before completing a short brainstorming session with the following titles: International trade
What benefits has your country gained from international trade?
How many of the possessions that you are currently wearing or carrying were made in your own country? How many were produced overseas? Include your telephone, clothing and the items in your pencil case?
Watch the following video, providing an overview of the history of free trade, its strengths and weaknesses. and then answer the questions below.(a) Why do countries trade?
(b) Describe the benefits enjoyed by the following stakeholders of international trading:
i. Domestic consumers
ii. Domestic businesses
iii. The world economy as a whole
(c) Trade between nations depends on which factors?
(d) What weaknesses did the video highlight of international trade?
Examine the following table which illustrates the relationship between national income and trade. All figures relate to 2018:
|Country||GDP rank||GDP billion $||Rank by export level||Export billion $|
1. Using a piece of graph paper plot a graph with GDP rank on one axis and export rank on the other. Using a line of best fit plot the relationship between the two variables.
2. Describe the relationship between the two variables?