In the contemporary society, there are an increasing number of people involved in the globalisation. I choose the topic of international trade. And in the following paragraphs, I am going to introduce what is international trade, other possible benefits of trading globally and the bottom line. (Heakal 2015) Thanks to the international trade that allows us to expand the market for goods and services. And also, as a result of international trade, the market contains greater competition with more competitive price and cheaper products.
Countries with strong international trade have become prosperous and have the power to control the world economy. Theorists have long established the benefit that individuals, companies and countries will have with comparative advantage over goods produced as long as these are produced with differing relative cost. The net benefits from such activity are called gains from trade. This is one of the most important concepts in international trade. There are discussion if the world economy is controlled by a few transnational corporations like Toyota Motor Corporation, Apple Computer Inc., Microsoft Corporations etc., and the companies seek only to maximize profit with little or no disregard to development needs of the population and if this exacerbates the inequalities between the developed countries and the rest of the world.
However, it has made the connection between developing countries and developed countries stronger, it made each country rely on another country. This essay has shown that some of the most significant benefits of globalization are goods and people, that are transported easier and quicker across boarders and for result free trade between countries has increased, nonetheless, it has made a lot of economy and trade advantages for developing countries, therefore it reduced the probability of war between
The developing countries have achieved this progress by reforming their policies, institutions, and infrastructure. The existing market structure, the market potential and the expected increasing returns are the leading criteria for firms for investment. With the growing global competition, the world economy provides a large source of supply and demand, so that international trade increases the possibilities for an adequate through specialization and complementary strategies. Economies of location can be seen as a prominent factor in globalization of industries. The transnational co-operations (TNC) are important market players in world trading system.
However, one limiting factor to globalization is the effect of cost reduction; this has been a challenge especially having a great impact on Africa, where the development in agro-technology has been less than adequate, therefore increasing the cost of production which will later be influenced by the price of food or agro-produce in the global market. This leaves most producers especially in developing countries operating at a loss rather than a gain. There is therefore a need to strategize for globalization to be beneficial. It is important for a country to take note of her available resources as specialization towards international trade involves a fundamental change in how a country utilizes its resources. When countries open up to international trade, they tend to grow faster and living standards tend to improve significantly.
1. The benefits of international trade: Encourage a nation's economy progress: International trade allows a country to utilize its resources to the highest extent. Moreover, different countries possess different kind of resources, so some countries can manufacture and offer same goods at the cheaper price (Heakel, n.d.). In addition, international trades also help to sell the surplus products in domestic market to foreign market which prevent price falling in home market (Patel, n.d.). Lastly, companies can source cheaper and/or better raw materials from import making them more sustainable and profitable.
It is really important to think that globalization creates the circumstances for development and economical growth but also leads to a number of disadvantages. Below there will be listed clearly the most important pros and contras of globalization. Advantages of Globalization: One of the most important effects of globalization is the inward investment. Many TNCs decide to invest in less developed countries by building a new company or even a factory. ' ' The integration of the workforce in developing countries into global system of production is already raising living standards, improving working conditions and creating more jobs in those countries. '
Some countries produce more than their own requirement. They sell this surplus production in other countries and avoid the occurrence of deflationary pressures in the domestic economy. (v) International Trade encourages countries to compete with each other in the production of different kinds of goods at low cost of production. Competitiveness stimulates productivity. (vi) It widens the extent of market.
DRAWBACKS OF INTERNATIONAL TRADING Drawbacks of international trade extent from negative social effects to opposing environmental consequences. Occasionally the well-being of people is overlooked or risked for the sake of return on investment. Other issues related to the exchange of services and goods between countries include a potential unsafe need of foreign countries and local occupation losses. There are social hindrances of international trade. While experience with other cultures can be an advantage, it can also be damaging.
International trade is made possible through the facilitation of buying and selling goods across national borders. This has been made easier due to improvements in transportation, communication, financial services along with economic and trade co-operation among nations. The international trading of goods and services is the core of many multinational firms operations and industrial producers no longer produce goods to satisfy their domestic market only. It is not possible for each country to produce all the goods and services demanded by local consumers, therefore international trade and trade openness is very necessary and important. Countries engage in trade because they either cannot produce a good cheap enough or they are not endowed with the resources to do so.