Pure, Per Se and Natural Monopolies
Exports refer to goods and services that are produced domestically and sold to other countries while imports refer to the goods and services from another country that are sold in the country (Mankiw & Taylor, 2006). For instance, the movie industry in the United States is huge and it makes up one of the major exports (Mankiw, 2008). One of the most imported products in the country is petroleum. The US is a major international market because it has a high number of imports and exports. The country’s main imports are crude oil while the main exports are electrical machinery. Countries choose to import the goods that it does not have. For instance, some countries do not have suitable land for growing food and they are forced to import food from other countries. Some of the factors that influence the country’s imports and exports include, price of the commodities, consumers tastes and preferences, the country’s exchange rate, cost of transportation and government policies (Mankiw & Taylor, 2006). Countries that choose to import products that are available locally do so to enhance trade between its trading partners and to bring diversity in the market. Countries export commodities as a way of dealing with surplus and enhancing the economy.
The country benefits from buying domestic products instead of importing. This is because when people buy goods that are manufactured in the country, it strengthens the local industries and this creates jobs for the people. The fashion industry in the country has received a lot of support from the local market. This has enabled it to experience a significant growth and recognition and this has worked to strengthen the economy. When people choose to buy imported goods, they strengthen the markets of the economies producing those goods at the expense of the local industry. Many people suffer because the local industries hire fewer people as they try to minimize costs. Buying goods that are produced domestically means that the money remains within the country and this strengthens the economic condition of a country. That money will be used to develop the country and it will create better living conditions for the people. Because of this, the living standards of people improve.
Local producers are more aware of what the people need since they are in the same region. They will therefore produce goods that meet the customer’s expectations and the set quality standards. One of the disadvantages of buying imports is that they sometimes fail to meet local expectations and because of this, consumers sometimes have to use substandard goods. These goods may be harmful and may cause various problems to consumers’ health. The problem also persists in the fashion industry where some imports are made from poor quality materials. The consumer ends up spending money on commodities that will only last for a short time. Some of the countries use exploitative means such as child labor when they are producing goods. They also use substances that may cause environmental harm and this leads to environmental degradation. When consumers buy products from such countries, they continue to encourage them to continue with these practices. Consuming domestic products will however make them to lose markets and putting stringent rules will cause them to abandon such practices.
Buying products that are produced within the country has some benefits. Some raw materials are in abundant supply and this makes the commodities less expensive than the imports (Randy, 2010). The government should therefore ensure that local manufacturers are not exploited and that they get value for their investment. The government can do this by ensuring that it provides favorable conditions for doing business. One of the ways it can do this is reducing the taxes paid by the manufactures and reducing associated operational costs. This will encourage more people to produce goods locally and this will create local competition, which is necessary for economic growth.
Mankiw, G. N., & Taylor, P. M. (2006). Economics. United Kingdom: Cengage Learning EMEA
Mankiw, G. N. (2008). Principles of Economics. New York, NY: Cengage Learning
Randy (2010). Buying American on a budget. Retrieved from http://buyamericanchallenge.wordpress.com/2010/10/05/buying-american-on-a-budget/
We Sprout Solution (2011). Buy local and buy American. Retrieved from http://www.wesprout.com/business-startup/buy-local-and-buying-american
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