In depth analysis about article Essay Example | Topics and Well Written Essays - 500 words - 1

In depth analysis about article - Essay Example The article contends that foreign trade does not necessarily increases the amount of value of commodity unless it is accompanied by increase in demand. This is important facet of economic principle that heavily relies on demand and supply of goods and services for optimal profit. The influx of capital and employability within the production process results in profits either due to new technology and methods that increase efficiency or there is decrease in wages that help to increase the percentage of profit. Thus, increase in revenue or decrease in consumption will result in accumulation of capital which can be gainfully employed for production of other commodities. They are indeed, vital inputs for trade and apply equally for domestic and foreign trade. Interestingly, the article also highlights that countries tend to favor import of those goods which have relatively higher cost of production. Ricardo gives example of corn which he says would be imported by England even if it has fe rtile land. Main reason is that it gains relatively higher profits on export of wine for which it has developed improved skill and technology which lower the cost of production.