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.
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.
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.
They could sell their goods and services to numerous countries. Furthermore, free trade allowed countries to specialize, countries could produce goods where they have a comparative advantage (a lower opportunity cost). The economy of a nation would be efficient when
Some people fear that free trade will lead to inequality in some states with a history of ineffective governance. Small family business cannot compete on the global scale, so free trade is not beneficial to local businesses when it comes to profit. With reduced tariffs imposed on imported goods, foreign suppliers can easily lower their costs. And as a result, consumers will prefer imported goods and products over locally produced commodities. Free trade will lead some countries to disregard the environment when it comes to producing products and getting rid of waste materials just so they can compete in the
Secondly, more consumers are available when a business sells its products or services worldwide; this again leads to higher profits. Globalization is in fact all about growing globally, varied resources, diverse benefit – a business that believes in globalization is an unsinkable ship
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. '
If the market access conditions have increase and been influenced by bilateral trade agreements. Trade agreements provide trading partners with lower tariffs. But it have made it harder for developing countries to take full advantage of poverty reduction and rapid growth since the government of particular country will apply different level of tariff rate to similar product depending on their origin. For exporter, markets access not only the disadvantages that the exporter faces to domestic producers and also on the relative pros and cons that it has compared to competitors from other countries (Fugazza & McLaren,
It has ended up simple to enjoy in worldwide exchange and commerce. Development of products, individuals, and capital has gotten to be simple, indeed in cases of far off areas. The material industry has moreover been touched by globalization. It has different preferences, but it too comes with its own drawbacks. Globalization in textile industry has both pros and cons.