B) The peculiarities of international trade

Aside from essentially quantitative considerations, world trade has certain unique characteristics

which require us to devote special attention to it.

Mobility differences. Though the difference is a matter of degree, the mobility of resources and

production is considerably less among nations than it is within nations. American workers, for

example, are free to move from Iowa to California or from Maine to Texas. If workers want to

move, they can do so. Crossing international boundaries is a different story.

Immigration laws, not to mention language and cultural barriers, put severe restrictions upon

the migration of labor between nations. But over the past decades great changes took place. A number

of European countries joined the Union to promote free trade, in which a single currency — the

Euro, was launched. A single labor and capital market came into effect in this Union.

But on the whole, different tax laws, different governmental regulations, different business practices,

and a host of other institutional barriers limit the migration of real capital over international

boundaries.

International trade is a substitute for the international mobility o f resources. If human and property

resources do not move readily among nations, the movement of goods and services can provide

an effective substitute.

Each nation uses a different currency. Hence, an American firm distributing Hondas or Jaguars in

the United States must buy yen or pounds to pay the Japanese or British automobile manufacturers.

Objectively, conclusion, as we will note shortly, is that the international trade is subject to political

interferences and controls which differ markedly in degree and kind from those applying to

domestic trade.