There are a number of issues that would be arising each time there is a trade happening. This is all the more increased when it is in the international level. This is why the International trade organization was started by with the support of the World Bank. It is a good thing to ask if all the commodities should be produced by the United States if it is a superpower.
Why are these countries not making their own televisions, automobiles, cameras and more? Why do they have to keep importing products from the Japan? And why is it that these countries like Japan import food grains and chemicals rather than making them by themselves? This is when the trade comes in to play.
There are a number of good reasons behind this. This can be due to the variation in the natural resources, the human resources, the ways and methods that are used in combining these resources efficiently and so on.
This would be the major reason why there are specializations seen for each country. These are also based on the opportunity costs that are involved for each of these products. It is important to know that when a country can use the same resources as the others and produce more quantity in a lesser time or at cheaper rates, it would be at advantage. That would be the trade that it should choose.
There are the countries which have naturally supportive resources for them to do better in that particular field that they are choosing, which may not be possible in the other countries. The international trade is seen to focus on few important concepts that are the opportunity costs, the absolute advantage, the specialization terms and also the comparative advantage. There is voluntary exchange seen when there is gain for both the parties that are involved in the trading process.
INTERNATIONAL TRADE ORGANIZATION - ITO
It is true for all, for the individuals and also the organizations. When there is specialization done in the area in which there is increased production and also consumption, it would be a profitable one. It would be profitable when done at low costs only. There are a few objectives that the people involved in the trading process are trying to fulfil. They would include the fulfilling of the few factors like the recognition of comparative advantage which would be the basis of the trade. They would also try to engage in simulation of comparative advantage. They then try to analyse the results that are obtained from the simulation results. They then use the comparative advantage model in order to make decisions about the area that they want to specialize in. They should be able to predict the results that would come out of this trade that they would be involved in.