Question

Is there a difference in the economic gains from trade when interpersonal exchange occurs within, compared to across, geo-political boundaries?

Answer 1

Trading across the boundaries of each countries need to undergo so many process to carry out its activities without any barriers. Few countries imposes tariff rates for the imported goods with the higher rate in order to safeguard the trade interest of the country which imports the goods from the other countries. Obviously it is strong reason for all the countries to capture the trade advantage. Such trade advantage are reflected with the comparative advantage of exports and imports of all products.

Let us discuss few facts of difference in the economic gains with the evidence of interpersonal exchange and by comparing the trade operations across boundaries with geographical advantage. Gulf countries has enormous surplus of oil resources but they lack in other resources of food crops, industrial needs and all other domestic needs. While European, Asian and American countries not have much oil extract resources like Gulf countries, But they have plenty of other resources which fulfill the basic domestic needs of all the countries. But recently, due to trade deficit issues, in order to gain trade surplus through interpersonal exchangeable goods both the countries which are import the goods for their own need adjust the tariff rate accordingly by having the advantage of geo-political boundaries. But some difference in the economic gains can also be achieved only by the favorable geographic based trade boundaries. Asian countries has the considerable geographical location of producing Organic products like Millet as they have moderate climatic condition which helps to cultivate the organic products in the large quantity. But other European and American countries has the cool climate favors to produce cherry fruits and other rich variety of rare grown fruits. So each zone of countries can exchange the products with the operations of import and export activities by having the reasonable tariff rate without affecting the economic gains from their trade point of view. Such interpersonal exchange of goods will fetch enormous economic gains with difference in the quality and nature of the products.