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Companies import goods and services to supply to the domestic market at a cheaper price and better quality than competing goods manufactured in the domestic market. Companies import products that are not available in the local market. There are three broad types of importers: Those looking for any product around the world to import and sell
Import substitution was heavily practiced during the mid-20th century as a form of developmental theory that advocated increased productivity and economic gains within a country. It was an inward-looking economic theory practiced by developing nations after World War II. Many economists then considered the ISI approach as a remedy to mass ...
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
Trade in goods and services can serve as a substitute for trade in factors of production. Instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and thus embody it. An example of this is the import of labor-intensive goods by the United States from China. Instead of importing ...
The permissibility of re-importation varies based on the product and the jurisdiction involved. For example, Canada prohibits re-importation of books exported from Canada for sale in other countries, while the U.S. prohibits re-importation of products made with packaging or formulations unique to the country to which it has been exported.
In export-led growth (such as oil and early industrial goods), the balance of trade will shift towards exports during an economic expansion. [citation needed] However, with domestic demand-led growth (as in the United States and Australia) the trade balance will shift towards imports at the same stage in the business cycle.
International trade theory is a sub-field of economics which analyzes the patterns of international trade, its origins, and its welfare implications. International trade policy has been highly controversial since the 18th century. International trade theory and economics itself have developed as means to evaluate the effects of trade policies.
An important topic is the role of exchange rates and the pros and cons of maintaining a fixed exchange rate system or even a currency union like the Economic and Monetary Union of the European Union, drawing on the research literature on optimum currency areas.