Saving Lives Through Trade.

Trade is caused by the exchange of goods. Where both parties are trying to find some benefit from the transaction. In other words, trade occurs through swapping goods. Trade is caused by the transactions of imports and exports. With imports, a party can receive rare goods, which are paid off through exports. Exports can be used to fund imports. There are many countries that lack resources, and require trade. These countries would have to give up exports in exchange for imports from a country that can provide it.

Trade is very common in the world today and our countries use it. Its needed to help circulate the demand for goods regionally. As mentioned before, there are countries that lack certain resources to efficiently produce a certain commodity. Other countries may flourish with a certain resource, which makes production easier. The availability of lumber is high in Canada, but in other countries like Japan, this may not be the case. Some fruits can only be produced in certain regions due to the climate and weather conditions, places like the Bahamas. There are advantages some countries have over others that can make trade possible, this can be beneficial for all parties involved.

Going back to the previous point, we can understand that trade is possible when a good is demanded from other places. When goods are bartered, there is a certain value attached. This value helps determine the terms for exchanging goods. Since Canada has enough lumber and not enough exotic fruits, it is willing to make an exchange. But with the exchange, Canada wants to ensure there are opportunities for profit and surplus. Lets go through an example, please keep in mind the numbers are made up,  just to keep the illustration simple. In this example, all transactions are happening on a per day basis. Supposing Canada is producing 8 tonnes of lumber, but only 1 tonne of Bananas. This must mean that Bananas are a rarer commodity in Canada. Now lets look at Bahamas' issue, based on assumptions per day we find that there is only 1 tonne of lumber in Bahamas and 8 tonnes of Bananas available per day. Could this mean there is opportunity for profit? Absolutely. If canada were to take their 8 tonnes of lumber, and ship it to Bahamas to exchange for bananas. How much Bananas do you think they will get? 64 tonnes! How can this be? Well, because we are taking an item that is common in Canada, and rare in Bahamas. We can exchange a good that is valuable in Bahamas for a good that is less expensive. Now when we take these 64 tonnes of bananas back to Canada, we bring back something that is rare and has high demand. Where there is high value for the commodity. This helps prove the benefits from trade, and the potential opportunities for profit.

The next point I'd like to consider is the benefits. Where can trade take us? If its done right, it could mean win/win situations on a global scale. It could also mean available resources in 3rd world countries at a cheaper price. This means countries with enough medicine can actually barter with poor countries, make profit, and help reduce prices of needed products in needy places. This could bring enough hospital supplies to sick kids that live in Africa, or have better relief available to places with potential earth quakes. To help make differences, its important to have a broader perspective. Not only could this create better, more profitable opportunities, but also more advanced philanthropic missions. Lives can be saved.

Written by Basim Mirza

Sources Used:

J. Davies. Acadia University. International trade Theory (Class Lecture).

Wikipedia. Trade. http://en.wikipedia.org/wiki/Trade