International trade

International trade is often understood as the exchange of goods, services and capital across international borders or territories. Since the past, international trade has been realised to play a very important role to every nation's economic development. International trade is a major source of economic revenue for any nation that is considered a world power. Besides, international trade helps expand capacity of production and consumption of a nation in which, without international trade, it would be limited to the goods and services produced within their own borders. Truly, every country can and gain benefits when taking part in international trade. Even, it is talked much about a liberal trade world in the future.

First of all, the most common reason is that countries want to protect infant industries that are just getting started (Rugman, A.M. and Hodgetts, R.M, 2002). In any economy, there are always young industries. They are job opportunities for local people, revenues for state budget, a contribution to GDP growth, etc but they are often not competitive enough with the same foreign products. In this case, I.T of that product will be restricted in order to protect local young industries, helping them have certain time to improve their competitiveness.

The second reason is to avoid political risk. Due to many reason of political, some countries do not want to trade with other country. For example: at the moment, the relation between North Korean and the United States is bad, and each government banned trade with opposite country. Sometime, trade between two countries is a double edged knife. For instant, with two countries have a dispute, restrict of international trade is a punishment of wealth country to opposite country. One more reason of political risk is the nation interests relate to maintain culture and custom, so that almost cultural production, such as: books, magazine, film and so on is very important. Due to the fact that the development of internet and global communication may threaten traditional nation, government should banned foreign content and holding of foreigner in this major. Rugman and Hodgetts (2002) show that countries, especially developed ones often refuse to trade with those having human right problems such as practicing apartheid or denying civil liberties to their citizens.

The third reason is protect domestic product. In some countries, such as South American countries, the quality of local production is not so good, and which are not competitive enough against foreign ones. Moreover, it can help domestic products have certain time to improve their competitiveness. When I.T is restricted, local production would have negative motivation to increase their product quality, design and so on. On the other hand, some local company would have a good position in market share, and can get more benefit.

Please be aware that the free essay that you were just reading was not written by us. This essay, and all of the others available to view on the website, were provided to us by students in exchange for services that we offer. This relationship helps our students to get an even better deal while also contributing to the biggest free essay resource in the UK!