Disadvantages of International Trade

Disadvantages of International Trade
Disadvantages of International Trade

Although many economic, social and political benefits are obtained from international trade, but the losses caused by international trade are so severe that the tendency to control it gets strengthened. The main disadvantages of International Trade are as follows:-

1. Decline of industries due to foreign competition : – 

Competition is considered to be beneficial as long as the economic development of the competing nations is at the same level. In fact, there are more countries in the world which are backward and only a few developed nations get unexpected benefits in the foreign market. The domestic industries of the underdeveloped backward countries cannot compete with the modern industries of the developed nations. Their downfall begins. During the British rule, India’s domestic industries declined due to the import of large quantities of manufactured goods from England into India.

2. Misuse of natural resources :-

There is a limit of natural resources in any country. Due to international trade, developed nations try to use the natural resources of backward countries on a large scale. Therefore, as long as the backward countries are capable of consuming those natural resources, then only the reserves of these resources are exhausted, as in India, most of the use of mica and manganese is still being done by foreigners, while now we also have a big business in our industries. It will be needed in quantity. But by now a lot of mica reserves have been depleted.

Impediment to self-reliance :-

International trade makes each economy dependent on each other. One-sided trade cripples the country’s economy and there is lack of self-reliance in the economy.

One-sided and unbalanced economic development of the country : –

According to the comparative cost principle in international trade, each country adopts specialization in the production of those goods, in which it is most capable and efficient and gets more profit. Due to this, not all round development of the country’s economy, but one-sided development takes place. It proves to be fatal in the time of political crisis and war in the country.

Adverse effect on the habits of consumers : –

 Where consumers get many types of cheap goods in international trade, simultaneously importing harmful goods can increase their use among the consumers of the country. For example, nowadays the trend of consumption of imported liquor from abroad in India and the habit of drinking Indian ganja and cannabis by the Beatles of America. In this way, international trade has a bad effect on the health, character and habits of the countrymen.

Horticulture and throttling competition :-

Due to international trade, the greed of grabbing the foreign market arises in the developed countries and they become so entangled in mutual competition that sometimes they are ready to sell their goods at a price less than the cost. go. This not only leads to the decline of domestic industries, along with the development of monopolistic tendencies, the efforts for economic exploitation are strengthened.

Fear of over-production or under-production :-

International trade encourages international specialization and expansion of markets. Demand cannot be accurately gauged from excessive expansion of markets. Every country increases production with a view to making maximum profit from international trade, in which excess production in the world can cause economic recession. Conversely, when production is less than demand, money spread gets promoted.

Damage to countries with primary industries :-

Law of Diminishing Returns applicable on increasing the quantity of production in agricultural or primary industries (animal husbandry, mineral digging, tea-plantation) countries by specialization in international trade. Whereas the Law of Increasing Returns is applied on increasing industrial production of industrial-oriented countries, due to this, industrial-dominated countries get more benefits than agricultural-dominated countries and trade terms are unfavorable to agricultural-dominated countries. Lives.

Decrease in internal consumption :-

When large scale consumption goods are exported from the country in the greed to earn foreign exchange, the supply for internal consumption remains less. Due to this the people of the country have to suffer in consumption. Tea, sugar, machines, fans, dry fruits etc. are exported from India, so due to less supply in India, higher prices have to be paid and consumption decreases.

Difficulty in wartime : – 

Although it is possible to meet national crisis and wartime situations in international trade, but if the war is done with the exporting countries or if the enemy blocks from all four, then the dependence on foreign countries is not considered free from danger. .

International hatred and conflict :-

As long as there is no tendency of exploitation in international trade, goodwill and cooperation increase, but when the tendency of exploitation in international trade becomes strong, the sprouts of hatred start growing in both the exploited and the exploited. Then they can turn into so much hatred that they can invite war. After the economic recession of 1990, mutual hatred between different countries increased, even in 1939 it culminated in World War II. England had to fight so many struggles in the establishment of the empire.

Injury due to unfavorable trade conditions : –

In international trade, the demand for imported goods is often elastic, so the country whose elasticity of demand for goods is more elastic abroad and the demand for imported goods from abroad is less elastic. So such a country has to suffer due to unfavorable trade terms. For example, foreign imports are essential for India while the demand for exports is elastic, so it has to suffer due to unfavorable trade conditions.

Political Slavery :-

It is true that trade gives rise to political slavery. (Flag Follows the Trade) England established its empire in India through trade and kept India in the chains of its political slavery for 150-200 years. There are examples of many countries like India which tell the story of post-slavery in continents like Asia, Africa etc. Therefore, international trade gives rise to political slavery.

Defects of Demonstration Effect :-

Due to international trade, there is a performance effect of the prosperous families of developing countries. They move towards Conspicuous Consumption like foreigners by not putting their resources in capital formation, this hinders the development of the country and the difference in the standard of living of the poor and the rich generates despair.

Domestic consumer deprived of high quality goods : –

High quality goods are often exported and often only substandard goods are left for internal consumption. Thus, due to international trade, the consumers of the country have to remain deprived of the consumption of high quality goods.

Economic Exploitation :-

Developed countries often exploit underdeveloped and backward countries due to unequal terms of international trade.

Political and Administrative Corruption : –

In international trade, corrupt methods like bribery, commission etc. increase political and administrative corruption to establish monopoly in big business companies, to settle deals of purchase and sale and to earn huge profits.

Obstacles in employment growth in backward countries : – 

Due to international trade, backward nations are not able to compete with the production of developed nations, so their export and production levels are low. Demand is met by imports, so employment does not increase and unemployment increases.

The above drawbacks and disadvantages are so frightening that many nations impose various types of restrictions on international trade. Emphasizes economic independence.

Therefore, if vigilance is exercised and effective control over foreign trade is kept prudently, then international trade can inspire the spirit of world fraternity by paving the way for all round development and economic prosperity of the country.

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