Importance Of International Trade On The United Kingdom

L01.1: Explain the importance of International trade to an open economy such as the United Kingdom. International trade is important to an open economy such as United Kingdom because the residents of UK’s wants are unlimited and they are insatiable as well. People’s urge to buy variety of goods and services are unimaginable notwithstanding that the good and services they want to buy, can be produced in the UK but unfortunately, they are not be satisfied with only the goods and services which are domestically produced in the UK because they believe that other countries are better at producing such goods even other goods different from what people use in the UK because of their natural endowments of productive resources. They have a lot of†¦show more content†¦Ã¢â‚¬ ¢ It can bring a more productive system: it enhances consumer choice and gives them the opportunity to buy and enjoy goods which cannot be produced in their various countries. They must not stick to consume the goods made in their countries. †¢ It brings new technology and ideas: innovation or investment is an essential mechanism by which countries can use to gain access to new technologies. †¢ There is less reliance on economies of home nations: they exploit the economy scale by operating from leading to lower average cost of production that can be passed onto consumers. †¢ Good living standard and reduction of poverty: when countries trade, it reduces poverty and raises quality living standard because it enables different countries to supply surplus products to other countries and earn foreign exchange (Riley, 2012). Disadvantages of International Trade: Import of harmful goods: international trade encourages the importation of harmful goods which are dangerous to the health and safety of the consumers. For instance, the importation of cigarettes and drugs from China into the UK would be very cheap and affordable to the consumers to buy and use them in large quantity thereby putting their lives in danger. Danger of Starvation: importation of foreign goods to the UK enables the countries