There are several advantages and disadvantages of International Trade that help you understand the importance of making business relationships with other countries to grow economically. International Trade – Advantages & Disadvantages. The disadvantages are: (i) The worst effect of foreign trade on backward countries is the destruction of their handicrafts and cottage industries. Do you remember the Obama Fried Chicken billboard from 2011? China has a reputation of doing this, even if there isn’t a business presence in the local market. Monetary gains to the respective country indulging in trade. Revenue streams have some protection. Due to the operation of comparative costs, international trade leads to specialization and one sided economic development which is not conducive to the prosperity of the country. For instance, the recent US-China trade war is adversely affecting the Chinese export industry. Countries or companies involved in the foreign trade are vulnerable to global events. Globally, international trade allows for greater consumer choice. It spreads out the risk a brand and business must assume. Brands and businesses involved with international trade can further reduce their risk by taking advantage of monetary exchange rates. 5. International exchange rates can be beneficial to a business. By opening its borders to international trade, a country allows its consumers to access foreign goods whose characteristics are often different from locally produced goods. Advantages of Exporting: One of the major advantages of export is the ownership advantage which is specific to the firms’ international experience, asset and ability of the exporter to either develop the differentiated product or low cost product with in the values chain (Hertner and Jones, 2007). Poor and backward nations can become rich and forward, Infographic Video – Advantages and Disadvantages of International Trade, Dumping | Meaning & Definition | Legal aspects of dumping, 9 Types of Consumer Sales Promotion Tools, What is Questionnaire? The debtor country exports goods to pay for its debts to the creditor country. It also results in stimulating their consumption and demand which cause further specialization which lower the prices of goods and services all over the world. Reference 17 3. 1. Advantages And Disadvantages Of Global Trade And International Trade 998 Words | 4 Pages. Textile industries are significant segment, which distinguished country’s success by which nations establish to accomplish its respective aimed goal. Advantages and Disadvantages of International Trade: Advantages: The main advantages of international trade to a country are as follows: (i) Economy in the Use of Productive Resources: Each country tries to produce those goods in which it is best suited. International trade may result in the exhaustion of essential materials and minerals of a country. Longer product lifespan. Import which is cheaper than producing that. It also analyses the comparative advantage and disadvantages of Haiti. It is argued that a nation which depends on foreign sources of supply lacks defence during the war. The impact of globalization on environmental protection is not too great and Did not stabilize the global economy. The survival of these countries depends on the exports of their manufactured goods. As the resources of each country are fully exploited, there is thus a great economy in the use of productive resources. Another advantage of international trade is that it helps the growth of the company by focusing on increasing the production of goods and services with the available resources. Advantages and disadvantages of sea transport for international trade Guide If your business needs to transport large quantities but there is no pressure to deliver quickly, shipping by sea may be beneficial. It offers the potential for development and expansion, but without the risks of internal research and development. You can view samples of our professional work here. Foreign trade is also known as International Trade. Importance of International Trade. Sovereign remedy in times of war and famine, 13. Trade exists for centuries but had known an international dimension with the globalisation. You are here: Home / Advantages and Disadvantages of International Trade. It provides a foundation for international growth. Closer ties between nations. 4. International trade encourages market competitiveness. 1. International trade increases product diversity and therefore consumer choice. The Retailer is the person who brings the products to consumers. England was blocked by German submarines, which completely blocked the imports of goods and essential raw materials. The advantages and disadvantages of free trade show us that any nation deciding to enter into an agreement must take proactive steps to guard their resources and people against exploitation without resorting to protectionism. While the international trade presents a number of advantages, it is not free from certain disadvantages. Let us first start with the advantages before making our way to the disadvantages. Essay on the Advantages and Disadvantages of International Trade ! World Trade Organization: Advantages and Disadvantages . ADVANTAGES OF TRADE Maximum Utilization Of Natural Resources. 6. In the competitive environment, businesses are competing at global level. Advantages of international trade. The effort and investment needed to achieve a global expansion project typically yields profit and market domination. Barriers to international trade. While each government determines these assessment of duties and taxes differently, it is typically calculated on the value of the products sent (item, insurance plus shipping). Europe and Africa could get tea and penicillin, respectively, only because of international trade. Advantages and disadvantages iv. Advantages And Disadvantages Of International Trade Agreements. This leads to a maximization for specialization across industries, fostering a higher level of innovation and quality of product development. It is a source of economic instability and it stands in the way of national economic planning for development and growth. Trade is not without its problems. This allows brands and businesses an opportunity to achieve sustained revenues from a diversified portfolio of customers in several markets instead of a limited customer base in a single home market. All payments are processed only in currency of home country. Middle east countries — oil resources, South east countries — Tin and rubber, India and Sri lanka – Tea. By observing a larger range of trends because of their greater level of global market access, brands and businesses can focus on quality, design, and product development improvements so that they can continuously improve and diversify. This dependence should be reduced or eradicated. Such a trade diversifies products and services that domestic countries as well as regions could receive. Advantages of International Trade Exports create jobs and boost economic growth, as well as give domestic companies more experience in producing for foreign markets. Instead of competing for a small sliver of that domestic market, going through international trade can help an organization target similar foreign markets where competition may be much lower. International trade facilitates exchange of goods and services from one nation to another. International trade through specialization of large-scale production, usage of machinery and exploitation of natural resources has resulted in the creation of a new industrial society. International trade, on the other hand, is trade among different countries or trade … Trade gives consumers and businesses greater choice. Advantages and Disadvantages of Being an Economist. Thus, for confirming that people have enough to choose from, it inspires countries to vary their product to simulate monetary progress. 8. Marketing and distributing your range of products in international markets is certainly a good idea. It would also be incorrect to say that the increase in competition would create more employment opportunities. While the international trade presents a number of advantages, it is not free from certain disadvantages.