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What does the UK gain or lose from an increase in imports and exports?
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Report 4 years ago
(Original post by Sean_C1999)
What does the UK gain or lose from an increase in imports and exports?
If UK increase exports:

  • They could significantly expand markets, leaving you less dependent on any single one.
  • Greater production can lead to larger economies of scale and better margins.
  • UK research and development budget could work harder as you can change existing products to suit new markets.
  • Unless the UK are careful, they can lose focus on your home markets and existing customers.
  • The UK administration costs may rise as you may have to deal with export regulations when trading outside the European Union.
  • T he UK will be managing more remote relationships, sometimes thousands of miles away.
  • In overseas markets, they may lose some of the control.
If UK increases imports:

  • It helps the country to make optimum use of its natural resources. Each country can concentrate on production of those goods for which its resources are best suited.
  • It enables the country to obtain goods which it cannot produce or which it is not producing due to higher costs, by importing from other countries at lower costs.
  • Foreign trade leads to specialisation and encourages production of different goods in different countries. Goods can be produced at a comparatively low cost due to advantages of division of labour.
  • Due to international trade, goods are produced not only for home consumption but for export to other countries also. Nations of the world can dispose of goods which they have in surplus in the international markets. This leads to production at large scale and the advantages of large scale production can be obtained by all the countries of the world.
  • International trade irons out wild fluctuations in prices. It equalizes the prices of goods throughout the world.
  • Helps with the development of the economy.
  • Due to international competition, the producers in the UK may attempt to produce better quality goods and at the minimum possible cost. Which increases the efficiency and benefits to the consumers all over the world.
  • International trade requires the best means of transport and communication. For the advantages of international trade, development in the means of transport and communication is also made possible.
  • International trade will have an adverse effect on the development of the UK industries. Threat to the survival of infant industries at home because of foreign competition.
  • Excessive exports may exhaust the natural resources of a country in a shorter span of time than it would have been otherwise. This will cause economic downfall of the country in the long run.
  • International trade gives an opportunity to foreign agents to settle down in the country which endangers internal peace.

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