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.
Introduction: International trade is the exchange of capital, goods and services across the international boarder or territories. In most of the country it represents a significant share of the domestic GDP of the country. Importance of International Trade: International trade consider as a backbone of our Morden commercial world. Producers of the various nations try to make profit through expanding the market rather than be limited to selling within their own boarders. Lower production cost in one region versus other regions, specialized industries, lack or surplus of natural resources and consumer tastes etc., are the various reasons for the occurrence of trade across the countries.
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.
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.
In other words, trade will be beneficial even if one country is less efficient in the production of two goods, so long as it is less inefficient in the production of one of goods. Due to the increasing development of production forces and the larger extent of specialization, the number of goods and services to meet human needs and wants has been more and more diversified, leading to interdependence among nations. In other words, specialization promotes trade demand and vice versa. A country cannot specialize its production without trading with others. It is international specialization that gives a manifestation of comparative advantage rule.
This unequal distribution of the round's benefits is attributed to the different competitive advantages every one of these groups bears. To be more precise, Asian countries have developed greatly on the textile and manufacturing sectors, the Latin American countries have invested in agricultural production (fruits, cocoa, coffee, etc) whilst in Africa the situation is different. Due to the political unrest there, many states are even now struggling with basic developmental issues like public services, health and infrastructure. It remains quite difficult for them to gain from the liberalisation of their markets, because of their low-income status, while on the contrary high- and middle-income developing countries gain significantly more from trade liberalisation. There are numerous reasons why this happens, but they usually include a strategic orientation toward exporting trade, increasing importance as a market for other countries, and a higher share of manufactures and other goods that potentially increase their competitiveness towards industrialised
When countries open up to international trade, they tend to grow faster and living standards tend to improve significantly. The positive development Africa has had recently in international trade is a good starting point which promises that the continent can benefit even more from
This fact led to a faster increase of world trade compared to output growth. Since 1985 world trade has grown nearly twice as faster as aoutput. Moreover, the composition of international trade changes, since before the Second World War agricultural products and raw materials were prominent in international trade, but after the main component of international trade has been the international exchange of manufactured good, as it is observable from Chart 1.2. A characteristic element of the second globalisation is the rise of multinational corporations accompanied by the increasing of foreign direct investment (FDI). In fact, multinational corporations use FDI with the aim of own and manage assets in more than one country with the purpose of production of good or services.
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.