Would it be desirable to import components rather than make them in the country itself?



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justaguide's profile pic

Posted on (Answer #1)

Trade between nations takes place as some goods and services can be produced at a lower cost in some nations than in others. The nations which are more efficient in producing something can devote all their resources to doing that and export the excess to others in exchange for goods that they are inefficient at producing.

If the nation in reference has the required resources like labor, capital, technology, etc to produce the components and can do so at a price lower than the price it can buy the same from other nations, it should make them on its own.

Else, it is economically beneficial to import them from other nations and its own resources can be devoted to make products that it is capable of producing with a higher efficiency and lower cost.

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