Question

What are the main barriers to trade, and what are some of the modern trends in reducing/expanding trade barriers? What is a regional market, and why are these developing? Why is understanding these issues important for developing an appropriate international strategy?

Answer 1

Trade is a basic economic concept which involves the buying and selling of goods and services, with compensation paid by a buyer t the seller, or the exchange of goods or services between parties. International trade allows countries to expand their markets for both goods and services. Trade barriers are government-induced restrictions on international trade.

The three major barriers to trade are natural barriers, such as language and distance, tariff barriers or taxes imported goods, and nontariff barriers. Nontariff barriers include import quotas, embargoes, exchange controls and buy national regulations. Trade barriers obstruct free trade. Reducing these barriers can result in stringer global trading system. The productivity gains from trade liberalization may also benefit from reforms in other areas, such as in labor or product markets.

The regional market is populations in certain areas that mainly share common features and are distinguishable from other regions. Each area requires a different marketing mix and strategies. The effective regional marketing strategy ensures the creation of a recognizable system of unique peculiarities of the region, which is a key factor to attract investments, including foreign direct investments. It is important to understand these issues properly for developing an appropriate international strategy.