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Automotive materials are supplies relating to motor vehicles. Countries embark on importation to keep business alive between two countries where business men are able to make gains from the trade activities. Many nations control the importation of automobiles to ensure that certain standards are maintained. Importing these materials affect the economy in both positive and negative ways:
Positive effects of Importation of Automobile Parts:
1. Improved trade relationships between Importing and Exporting countries
2. Capitalizing on the competitive advantage of exporting countries to get cheaper raw materials for further production of targeted end products e.g. completed automobiles.
3. The cost of buying cars reduces as imported automotive parts improve the current supply and production of value added automotives.
Negative effects of Importation of Automobile Parts:
1. Importing more than the required or stipulated volume of automotive parts may add up to the reasons why an economy may suffer a trade deficit. In this case it means that the country's importation value far exceeds its exportation values.
2. In countries where the same automotive parts that are imported are also manufactured locally, stiff competition from the uncontrolled importation of these materials may put the indigenes out of business. This immediately affects domestic production and employment.
The effects of importing automotive materials depend on the current situation of the particular country. The overall effect may be positive for some while it is negative for others. This is dependent on what happens currently in the economy and the policies that are on ground to balance trade effects.
What else can I help you with?
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