• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Benefits and Costs of International Trade.

Extracts from this document...

Introduction

International trade can help and hurt a business or a government. When a business decides to trade internationally there are a whole new set of rules and procedures to follow and different cultures to adapt to. A business like Tesco has to be prepared to understand numerous factors before deciding to operate in a certain country. They cannot rush headfirst into a country expecting them to like the same things that English people like. Even the layout of the store may have to be changed to suit a certain country or the products sold may be promoted in different ways etc. An example of this would be in a Japanese shop David Beckham may be advertising chips but in Iran a different person more well known in the Arab world. Britain has traded with the rest of the world for many years now. They do this for a number of reasons these include: > There are larger markets which means Britain can trade to more people > Could be cheaper > Products that are not produced in the UK are made available > Improves diplomatic relationships > Free trade within the EU > Wider range of choice International trade brings with it advantages and disadvantages. ...read more.

Middle

Quality of products differ for example Belgian chocolate is seen to be the best tasting chocolate so thanks to International trade consumers can now buy chocolate straight from Belgium. The disadvantages of International trade are: > Disadvantaging developing countries > Taste is different > The environment can suffer thanks to International trade > Workers are exploited The above are all costs of International trade. Companies such as Tesco and Nike etc. have all these things to account for when they trade overseas. Disadvantaging developing countries is a complicated, harsh but true process. A Company like Tesco may decide to buy their wheat from Kenya, they pay the farmer £2000 for the wheat and sell the same wheat for triple that price in developed countries. Taste is different for different people around the world so companies must make sure that they study and can understand a countries culture and tastes. Environmental issues are very important because increased International trade means the world will become more busy and must transport more things across the world, by planes, cars, trains etc. ...read more.

Conclusion

They do this for a number of reasons including: > Infant industries- in this case a government will introduce a tariff or quota when a business is starting up so they can grow before foreign producers arrive. > Unfair competition- e.g. when a company sells goods abroad at a lower cost to capture a market, foreign firms may receive subsides for making certain products. > Balance of payments- reducing imports improves the balance of trade > Strategic industries- to protect the manufacture of essential goods > Declining industries- to protect declining industries from creating further structural unemployment. The result of introducing protectionism is as follows: > Prevents countries enjoying the full benefits of International specialisation and trade > Invites retaliation from foreign governments > Protects inefficient home industries from foreign competitors which means consumers pay more for inferior products. All trade around the world is monitored by one governing body called the WTO (world trade organisation). It was set up in 1955 with the aim to help trade flow smoothly, freely, fairly and predictably. The WTO looks after trade agreements, acts as a forum for trade negotiations, settles trade disputes, reviews national trade policies and assists developing countries in trade policy issues. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Where does the World Trade Organisation fit in the overall scheme of international public ...

    Second, the nation-state is in retreat. National governments, acting separately and independently, are unable to cope with global problems such as pollution, disease, job losses, and health, education and gender issues. The core prescription follows: "global solutions" are needed to provide "global public goods". Global governance should take the form of partnerships involving governments, international organisations,

  2. Will trading fairly reduce world poverty?

    Supporters of the WTO argue that it is democratic, in that its rules were written by its member states, many of whom are democracies, who also select its leadership. They also argue that, by expanding world trade, the WTO in fact helps to raise living standards around the world.

  1. Critically evaluate Brazil's International Trade Policy in terms of key trade issues and primary ...

    This report aims to critically evaluate the Brazil's International Trade Policy. The evaluation combined with some trade issues including trade barrier, export financing programmes, globalisation, controlling unfair trade practices, subsidies are discussed in the international trade context to identify the benefits and limitation of current trade policy.

  2. Why did it take until 1833 for the British government to illegalise the transatlantic ...

    Africans being inferior they were not the sole reasons why it took until 1833 for the British government to illegalise the transatlantic slave trade, there is also the economic success of the trade. According to Richard Howard "In the single decade from 1783 to 1793, Liverpool slavers mad a estimated profit of £2,360,000 for carrying 303,000 slaves.

  1. International Trade - I have been asked to investigate the possibility of a company ...

    Import Quotas One method of limiting imports is simply to close the ports of entry into a country. More commonly, maximum allowable import quantities may be set for specific products. Such quantity restrictions are known as quotas. These may also be used to limit the amount of foreign or domestic currency that is permitted to cross national borders.

  2. international trade

    Heckschler-Ohlin theory: Eli heckschler (1879-1952) developed with Berthil Ohlin ( 1899-1979) a theory to explain the existence of international trade based on a comparative cost advantage between countries producing different goods. The Heckscher-Ohlin theory says that two countries trade goods with each other (and thereby achieve greater economic welfare), if

  1. The Benefits of Trade

    'Free markets depend on no one being able to manipulate or corner the market; if one person or a small group of people are so powerful that they can control the market, then the free market ceases to exist .'

  2. Globalization describes the ongoing global trend toward the freer flow of trade and investment ...

    All of the national economies of the world are interconnected now through their dependence upon each other for trade. Problems anywhere in the world economic community, with Japan and Argentina being recent examples, create economic problems for nations all around the globe.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work