Miss

Kenyan International TradeNameInstitution of AffiliationKenyan International TradeInternational trade among countries involves exporting and importing of goods and services among countries to try and create a balance of payment. Countries dealing with unique goods have absolute advantage compared to their trading partners in dealing with some of the trade goods in the world market (International Trade, 2011). The absolute advantage ensures that the countries specialize in mass production of the goods because of the reduced cost of production and profits earned from their sale. The Comparative advantage allows countries to produce certain goods at a lower cost compared to their trading partners. Kenya as a country might have an absolute advantage of producing agricultural products compared to her neighbors. Comparative advantage in Kenyan will allow the country to produce goods at a lower cost compared to the competing nations. The advantage is supposed to make the country export goods to the neighboring nations that still produce the same product at a higher price. The comparative advantage is supposed to allow a country to give up production of one product and then specializing in the commodity it can produce at a low cost. The neo-classical theory assumes existence of two trading partners in the world with two trading products. The theory has an assumption of what one countries export must be the import of the different country. The neoclassical theory includes an assumption that there is only one input in production of goods and services. The theory requires that the market has a perfect competition where no one country can control the supply and prices in the market (Marrewijk, 2012, Pp. 212). The forces of supply and requirement of commodities in the market determine the prices of commodities. The modern theory looks at the trade in regards of endowment of the country with technology, labor, and capital. The modern theory will establish those commodities that Kenya can produce best because of existence of all the factors of productions at a lower cost. One of the major trading partners of Kenya is China where it exports agricultural products while importing manufactured products. Some of the manufactured products imported by Kenya from China include Laptops, computers, and electrical products. Some of the agricultural products exported to China include tea, coffee, and cashew nuts. In the year 2008, Kenya imported Knitted fabrics worth 1,062,997,405 Kenyan Shillings from China (Ministry of Trade, 2012). The imports were made while Kenya was a main producer of cloth making raw materials like wool, cotton, and silk. These raw materials have a major contribution in production of clothing materials but technology acted as a limiting factor of production. The Kenyan public and the government did not have enough capital to invest in fabric production leaving farmers to use old technology in production. The old technology led to high prices of fabrics produced within Kenya making them unattractive to consumers. Consumers preferred cheap fabrics imported from China, which was a huge contributor of importing fabrics worth more than a …
Posted by: Min Brust

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