Background Of International Trade
The process of globalization can be said to have started with the system of mercantilism during the colonial times; this is a system of trade where one country tried to set up a positive balance in trade by increasing the value of exports so as to accumulate wealth of the other countries. The development of steam engines and airplanes had immensely contributed to the development of international trade. In present times the wide spread use of internet has revolutionized the process of international communication and people from an Asian or American country can buy products from remote countries like Germany or Australia with just one click. Since 1945 the World Trade Organization has made the international trade laws considerably lenient which has slowly led to the boom in globalization. As a result more and more nations are conducting their businesses overseas than they used to in earlier times.
The Boons Of International Trade
International trading has flourished all over the world in recent years because of the numerous benefits it offers to different nations across the world. It allows an easy exchange of products, goods and services across the various nations without any hindrance and thus it can be a substantial source of revenue for the developing nations. Some other advantages of international trade are listed below:
The merits of international trade have been the most vital drivers for economic growth of a nation since the second half of the 20th century. With globalization a far wider variety of products is now available for consumers and thus the consumers are getting a variety of choices which would not only improve their standard of living but also help to boost the economy of the country. It enables a nation to consume things which are not produced in the country and so it becomes much cheaper to import it via international trade. International trade also enables a nation to utilize its resources to the maximum. Without export and import the resources of a nation goes unexplored and so foreign trade has effectively minimized the wastage of resources.
It encourages production efficiency since it is implied that the nations would go for better and more economic modes of production which would keep the cost of the product low so as to stay in the competition. This would also help to raise the standard of the commodity and the consumers would be able to enjoy a quality product at a very cost effective rate. One of the major advantages of globalization is that it generates more employment when the market for the products of a nation has broadened through trading. Moreover the establishment of new industries to take care of the growing demand would also open up a channel for employment. The importance of Multinational Corporations in a country’s economy has become much greater and companies are now stressing on the idea of ‘think globally act locally’ and have changed their strategies accordingly. On the internet one can find hundreds of sites where they would find all the details of the international trade news and thus stay ahead of the competition.
Factors Affecting International Trade And Globalization
Changes in technology like easier and cheaper transportation has immensely boosted global trading. Since the 1980’s the process of deregulation in many countries starting with United Kingdom has led to privatization which has allowed business owners in one country to purchase a business in another country. The removal of controls in capital exchange has made the flow of money from one country to another much easier. For example if the business prospects in one’s country looks dismal then he can now shift his business to another country. Free trade has eliminated many trading barriers and most of this has been achieved by the WTO and the ITO (International Trade Center) which is a subsidiary of WTO.
The International Trade Center with its headquarters in Geneva has been focusing on aiding the developing countries to promote their export rate. They have been offering a number of technical assistance services to its 3 major beneficiaries viz the institutions of trade support, the policymakers and the enterprises of the developing nations. A set of rules and regulations which would ensure proper handling of international trade has been included in the International Trade Law. In present times this law is regarded as an independent field of study since more or less all the nations of the world are participants in international trade and are members of the WTO. This special branch of law has emerged as a very distinct academic discipline which is being taught in all the major universities of the planet.