The paper "Are Global Trade Patterns Consistent with Economic Theory" is an outstanding example of a micro and macroeconomic assignment. The global trade patterns apply the theory of international trade which basically concerns the trade between nations involving all aspects of economic relations between states (Luckus, 2015). It involves the application of monetary theory and general value theory to special cases where households and firms are grouped into regions or countries of a differentiated macroeconomy. The existence of global trade is due to the fact that different countries have variations in productive factors (John, 2014).
This, in turn, led to the difference in price in different countries which is the major factor that leads to global trade. There are numerous patterns of global trade that are consistent with economic theory. The international specialization and territorial division of labor make most nations benefit since a country will just specialize with the production of specific products making it enjoy special advantages (Nagwa, 2014). All states do not equally own natural resources and abundant capital and facilities to produce all goods and services they need.
With international trade, states are able to produce only those goods for comparative advantage only and import others from other nations. This led to the global division of labor and specialization and in turn enabling efficient use of factors of production hence minimizing wastages. In addition, specialization leads to economies of scale thus lowering the cost of products and serves (Goldon, 2014). Despite the fact that allocating resources to the most industrious resources in a country are more beneficial, global trade has led the nations to refuse to rely on a few products.
This has led to diversification where states have been vulnerable to changes in the economy of the world making them have new treaties and trade laws, recessions and new technologies (John, 2014). How might democratic states avoid a ‘ protectionist backlash’ against free trade? Many democratic states have the idea that restraining free trade is highly crucial for the intention of protecting local traders and business from foreign competitions (John, 2014).
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