Question

Why a counry like Japan, which is more efficient in all types of production han North Korea, could benefit from trade with North Korea?

Answer 1

It is because of following reasons-

Increased competition: When trade increases, it lowers the cost for customers and the variety of products increases too which helps the country to grow even if it’s Japan. It’s true for every country.

Specialization: Even if Japan is efficient in many techniques, there must have been some techniques which is specialized in North Korea only, a trade like that would help increase its efficiency definitely.

Political perspective: Countries often trade to make their political relations better. By this, both the countries can help each other when time comes.

Comparative advantage: It refers to the technique of producing goods at lower marginal costs. International trade helps every country gain even if one country is more than another as in case of Japan and North Korea.

Raw materials: Japan has few raw materials. So it’s important for Japan to trade with North Korea which is rich in raw material in order to increase its GDP.