International Trade
International trade has grown over the last few centuries and is now being experienced in almost all countries. It refers to the exchange of goods as well as services along international borders. In the past years, international trade has undergone a remarkable change as a result of technological advances, which triggered a period of world business growth referred to as the first wave of globalization, as pointed out by Wagner (239). The global trade involves the exports and the imports. Although international commerce was greatly affected by the First and the Second World Wars, it started to pick up again immediately after the conflicts were ended. Currently, the imports and exports across the nations accounts for more than 50% of the global production, according to Laursen (105). However, international trade has both advantages and disadvantages which affect the global economy.
Advantages and Disadvantages of International Trade
Businesses that tend to expand to international market are deemed to do better compared to the purely domestic ones, which is due to the wider market coverage, as asserted by Laursen (106). For instance, well-known American companies such as Coca-Cola and Nike have significant footprints overseas. International trade makes many countries to be inextricably linked to one another, therefore taking the advantage of exchange rates to exports and imports. The practice ensures maximum profitability as a result of sales growth, which is not limited to domestic markets. Consequently, exports create jobs and boost economic development in the domestic nation. This is primarily because it gives home companies the experience needed in order to produce for the foreign market, hence gaining competitive advantage in the global trade.
Importance of Imports
Another advantage is that imports have the merit of allowing foreign competition to reduce the prices of goods and services to the customers. The consumers are also given a variety of goods and services to choose from (Laursen 109). For instance, international trade provides the online shoppers with the opportunity to choose between commodities and services from different countries in one location, such as a multi-national supermarket. Tropical as well as out of season vegetables and fruits are also globally available due to imports.
Disadvantages of International Trade
Nevertheless, apart from advantages, international trade also exhibits some downsides. First, it may lead to reduction of jobs in domestic industries that are incapable of competing on a global scale (Wagner 241). Exports can only be boosted by making trade easier globally, which forces the government to decrease tariffs as well as blocking of imports. Secondly, international trade may lead to adverse job outsourcing (Wagner 248). This happens when companies relocate their call centers, manufacturing as well as technology offices, as asserted by Wagner (252). They, therefore, maliciously choose nations with the lower standard of living, leaving behind economic sufferance in their original countries. An example is the United States and Europe which possess firms in other places due to cheap labor production.
Conclusion
International trade is associated with both advantages and disadvantages. Over time, there has been an increase in global commerce resulting in the growth of the economy due to the imports and exports (Wagner 257). Additionally, consumers are able to experience a variety of goods and services according to their preferences. However, international trade may also result in the reduction of jobs in addition to adverse workplace outsourcing, as industries try to meet the standards of the global market. Therefore, although international trade brings countries together, it may be a cause of the weakening of the domestic industries.
Works Cited
Laursen, Keld. “Revealed Comparative Advantage and the Alternatives as Measures of International Specialization.” Eurasian Business Review, vol. 5, no. 1, 2015, pp. 99-115.
Wagner, Joachim. “International Trade and Firm Performance: A Survey of Empirical Studies since 2006.” Review of World Economics, vol. 148, no. 2, 2012, pp. 235-267.
