Advantages Of International Trade For Developing Nations

Advantages of international trade for developing nations Although the concept of free trade and globalisation may subtly imply a polarity between the developed and developing worlds, it can be argued that, in order to function successfully, the pressure to create a competitive and comparative advantage hold all nations on a level-playing field. Sinclair Davidson (2015) cited David Ricardo (1821) in his argument that foreign trade is, indeed, beneficial to a country, for a number of reasons. By reducing the cost of commodities and raising living standards through the creation of jobs, international trade allows developing countries to create a competitive advantage. Michael Porter’s diamond model of competitive advantage, published in 1990, sought to understand why a particular nation had the ability to succeed in a particular industry (Hill, 2015). Within the model are four attributes that include demand conditions; related and supporting industries; factor endowments and firm strategy; and structure and rivalry (Hill, 2015). Upon the fulfillment of all four attributes, the country in question will be regarded as holding a competitive advantage in a particular industry. Porter argues that these factors are created, not endowed (Bernard, 2016). Beyond these four factors, the government may intervene to an extent, whilst still remaining true to the spirit of free trade - non-intervention or disruption. They do so through trade policies that have an influence over the imports,Show MoreRelatedInternational Trade And The Global Marketplace1428 Words   |  6 Pagescountries are engaged to international trade in order to achieve economic grow th, free trade agreement and financial liberalization has contributed to the opening up of world economies and resulted in more international trade. 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