If a country cannot efficiently produce an item, it can obtain the item by trading with another country. This can be a comparative advantage of a country. International trade not only results in increased efficiency but also allows countries to participate in a global economy, encouraging the opportunity of foreign direct investment. This is the amount of money that individuals invest into foreign companies and other assets which leads to growth in employment and revenues and it promotes activity, progress and innovation within an economy and improvements in manufacturing quality for both the
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.
As a determinant of commitment dimension, this function leads to higher level of trust for creating and enhancing an ongoing strategic business relationship (Zineldin, 2004). On the other hand, trust is a necessary determinant of commitment levels too. When partners trust each other and have high levels of commitment, it is easier for them to adapt to the necessities of the relationship. Mutual benefit also influences relationship commitment. Firms will commit to more involved relationships when they have opportunities for greater benefits, such as lower costs, improved productivity, higher customer satisfaction, and better product performance.
In order to survive the global competition and sustain their business, cooperation may grow their size by expanding their markets internationally. Expansion means that cooperation is approaching the target market that they have already served but in a different location or reaching new market to increase sales and profit. Another advantage of expansion is cost efficiency due to several reasons such as (1) maximum advantage of global supply chain; (2) lower labor costs; (3) new technology; (4) tax benefits; and (5) reduced transportation cost. Further, corporation is able to add more product line if they choose to capture specific international market. Besides, this avoids dependency to one nation’s economy.
Consumer’s needs and demands for different types of goods can always be met with the importation of goods from overseas. As a result, consumers not only enjoy cheaper and wider range of goods, they also benefit from the better quality of the products they
7 The employment level is expected to be positively affected by trade liberalization due to ease access to cheap raw material and capital machinery, which promote development opportunities in a country. Trade Liberalization It is the openness index which is represented by trade-GDP ratio i.e the sum of export and imports to that of the GDP. TL= (X+M)/GDP Where X Total exports of country M Total Imports of country GDP Gross Domestic Product of India As export increases the value of trade liberalization also increases and vice versa. . Hence, more openness Human Capital It can be expressed as the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country.Here,
This means that countries have to work together more closely and rely on each other for prosperity. International trade occurs because individuals, businesses and governments in one country want to buy goods and services produced in another country. Trade provides people with greater selection of goods and services to chose from and often these goods are available at prices lower than those in the domestic economy. International trade is the system by which countries exchange goods and services. Countries trade with each other to obtain things that are better quality, less expensive or simply different from what is produced at home.
Consumer welfare increases as consumers can obtain lower cost goods with better quality. Free trade also encourages FDI and technology transfer from multinational corporations, which contributes towards economic development and growth of the country. Thus, the country should embrace free trade as it is a more susceptible plan for the long
For one the employment opportunities are methods through which the people in the host countries is seized, can create personal wealth. The improved roads, schools and hospitals are also one of the most direct benefits that the host country realises. Urban areas are able to grow, and this is an effect that improves the standard of living of the host country and the people in these countries. As Multi-National Companies enter different foreign markets, they are able to widen the international and domestic markets. This is a benefit that can be seen from the onset.
International standards aim to add some credibility on consumers’ expectations regarding product or service quality. They bring technological, economic and societal benefits. Through assisting firms and facilities to tackle kind of strategic problems that they face in engaging international trade, efficient and safe production of goods are assured. Moreover, international standards help to add up better competition environment for businesses, enhance customer satisfaction, better accession to the markets, optimize production and hence reduction in costs, increase market share through obstructing trade barriers. For society, the products that has international standard are obviously safe, trustable and have a good quality.