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2018-08-18

barrier to trade language

The current state of the economy of Germany depends on international trade. More than ever before. Professor Karl Morasch, and Florian Bartholomae, therefore, in their book, the International economy, consequently, questions as to the classification of trading costs:

  • What types of trade costs are there?
  • The extent of trade cost compared to the manufacture of the goods cost?
  • How high is the relative importance of different types of trade costs such as transport costs or trade restrictions?
  • What is the role of trade costs for the Integration of countries into the world economy and for the activities of companies play?
  • How have important types of trade costs in the course of time developed?


Sub-trade costs, all the costs are combined, are connected in order to bring a Good from the producer to the consumer. Trade costs thus include all expenditures incurred for the Transport, in connection with the Overcoming of borders and the Distribution of goods in the destination country. Trade barriers are costs, in spite of the worldwide reduction in trade, innovations in the communication and in the transport sector, as well as the improvement of the infrastructure as economically non-negligible.

Trading costs differ considerably between the individual countries. You, for example, are higher if countries do not have access to the sea or far removed from major trading partners. On the other hand, such as the removal of regulatory barriers reduced in the framework of the European internal market, the trade costs between the member countries of the EU. The economic relevance of the trade cost but also depends on the nature of the goods. Transport are, for example, costs for high-quality industrial products compared to agricultural goods and raw materials is relatively unimportant.

To get an idea of the fundamental Dimension of the individual types of trade costs, we want to abstract now, but those Differences and the average trade costs for a developed country. According to the Anderson/van Wincoop, the average trade cost when exporting in an industrial country an increase of 170 % on production costs: a Good international trade costs, which costs, in turn, from transport and border related costs, and the Well 74 % increase the price incurred when trading. On the other, distribution costs in the destination country, the costs amount to a total of 96% (based on the pure production price without international trade). The splitting into the different types of trade, the figure shows the cost in Detail

It is interesting to note in this setup, the directly measurable costs such as freight costs and customs duties and other trade barriers, only a relatively small part of international trade costs. Indirect transaction costs in the Form of time, language barriers, information costs, and securing significant cost in contrast.

The Text is taken from International Economics – trade and competition on global markets of Karl Morasch and Florian W. Bartholomae; UTB, 352 pages, ISBN 978-3-8252-8475-6

Article image: © Katharina Wieland Müller / pixelio.de

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