Question

Analyze and explain how the immobility of resources between nations is compensated by the international trade of goods?

Answer 1

Case Specifics

Resources of any country are limited and are difficult to move from one place to another if not impossible. The reason for this is that countries which are rich in minerals, waterways or any other resource such as capital would not be available in another country which would then have its own.

As such, we have learnt over time that these basic resources are available in countries to different degrees and cannot be transported from one country to another.

However, it is important to know, that over a period of time, countries have removed barriers on trade which used to be there earlier. Today, goods and services are traded more openly internationally than they ever were.

This allows countries to transfer resources into final products and have them available for sale for countries which lack such resources. For example, countries such as Bangladesh and India in the Asian Sub continent are rich in natural resources such as minerals, land and agriculture whereas Afghanistan, Sri Lanka and others in the same region are not as rich. They have other resources however, such as Afghanistan is rich in spices and Sri Lanka in tea etc.

This makes countries unique and they produce those goods and services at which they are better off in producing. It allows them to transfer the resources from one country to another in the form of final goods rather than making raw materials available which are unique and distinct to any country.

Conclusion

We can conclude by saying, that resources for a country remain fixed and cannot as such be transferred to another country. However, with international trade restrictions being negligible and countries expanding their production beyond local demand, they have realized that it is best to produce those goods which it has an advantage in production. They can then transfer this advantage in the form of final products which can be exchanged for a consideration with another country.

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