IMPORTANCE OF THE INTERNATIONAL TRADE OF MEXICO

IMPORTANCE OF INTERNATIONAL TRADE IN MEXICO

The importance of international trade can be measured by the volume of exported goods, which has been growing in absolute and relative to domestic production amount, and the degree of interdependence of world economies. In addition, international trade is a substitute for resource mobility. Finally, it also affects domestic prices, the level of employment, and all the political actions of the government in domestic matters.

Mexico represents a range of options for foreign companies interested in investing, we can say that the main feature to note in terms of trade in Mexico is the extensive network of treaties and trade agreements, covering 43 countries and preferential access to more than billion potential consumers, efforts have focused on diversification of markets for products and services; and through free trade agreements and complementation agreements and economic partnership, has established fruitful ties with economies in Europe, Asia and Latin America, which has greatly boosted trade in Mexico.

The reason why nations trade is tied to the concept of comparative advantage. A nation has a comparative advantage if it is able to produce a good relatively more efficiently than another country. The nations will specialize in those goods in which they have a comparative advantage and exchanged with other nations. The existence of natural resources in a country is an important source of comparative advantage.

Each nation specializes in the production that gives a comparative advantage. Specialization allows each nation intensively use their most abundant resource and to some extent the scarcity of resources does not possess. The price of the abundant resource goes up and the price of low scarce resource. Due to the law of diminishing returns and increasing opportunity costs, specialization is never complete.

In the case of Mexico, comparative advantage serious the following:

• The Workforce

The workforce has an average age of 22, he is much younger, technical and specialized than that of our major trading partners; allowing us to have a critical mass of human capital, with great potential to be adapted to new conditions in international markets.

• Geographical Position.

The main Asian countries (China, Japan and Malaysia) took on average of 15-23 days to supply the North American market to compare our companies.

These countries also take 12 to 24 days to reach the South American market with respect to products shipped from our country.

• Network Trade Agreements.

These agreements allow the export of products manufactured under preferential treatment, advantage not have our competing countries, as they have a very limited number of trade agreements.

• Natural Resources.

Natural, of which China lacks, such as oil, farmland, resources makes it easier to produce various goods for export, so we have to Mexico exports fruits, vegetables, chemicals, pharmaceuticals, leather, construction materials making it a privileged country.

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