Question

International trade has been a great boon for many countries and, in general, has been more beneficial for the world than not. However, there are both costs and benefits associated with international trade. Present and discuss two advantages of international trade and two disadvantages of international trade.

Develop a response that includes examples and evidence to support your ideas, and which clearly communicates the required message to your audience. Organize your response in a clear and logical manner as appropriate for the genre of writing. Use well-structured sentences, audience-appropriate language, and correct conventions of standard American English.

Answer 1

International trade allows exchange of goods and services across the borders. It refers to the buying and selling of goods and services between different countries. The need for international trade arises due to the fact that resources are unevenly distributed among the countries, climatic conditions, growth rate, technology, etc. It has various advantages & disadvantages associated with it.

Advantages of International Trade:

1) Allows businesses to grow internationally: International trade helps the companies to cater to the entire world market. Companies that are involved in exporting can achieve levels of growth that may not be possible if they only focus on their domestic markets. 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. For example, US companies like Apple, Starbucks, Walmart has expanded its business on large scale due to international trade.

2) Availability of all types of goods within a country: With the help of international trade a country can import the goods which it cannot produce on its own. Sometimes a country incurs a higher cost in producing some goods, so international trade enables a country to import such goods at lower costs from other countries. For example, India imports Aircrafts, spacecrafts and its parts from other countries. Also it imports crude oil from Saudi Arabia & Iraq. India is 80% dependent on imports to meet its oil needs.

Besides these there are several other advantages of international trade such as it enables each country to make optimum use of its resources, it helps to stabilize prices of goods throughout the world, promotes exchange of technical know-how, encourages market competitiveness, etc.

Disadvantages of International Trade:

1) Companies have to face cultural complications: Different countries have different cultures, attitudes, standards, and expectations that can create problems for a brand and business. Failing to consider the expectation a different culture may have can lead to mistakes that damage the reputation of the brand and can be very costly to the bottom line. For example, Mc Donalds needs to design its menu according to the country to which it is serving. In India, Mc Donald’s doesn’t serve any beef or pork in any form because it knows that it may affect the religious sentiments of people in India. While it serves beef or pork products in other countries. So, it is very important for a company to encounter such issues before it starts serving a new market.

2) Shortage of Goods in home country: Sometimes the essential commodities required in a country and in short supply are also exported to earn foreign exchange. This results in shortage of these goods at home and causes inflation. For example, India has been exporting sugar to earn foreign trade exchange, hence the exalting prices of sugar in the country.

Other disadvantages associated with international trade are that it may result in import of harmful goods like spurious drugs which adversely affects the economy, local industry suffers, unemployment in local market as sometimes capitalists find that importing goods can give them more profit then producing it in the local market, etc.

So, we can see from the above discussion the various favourable and adverse effects of international trade. One country can profit greatly from it by exporting, but not importing, goods and services. So, it is important for the growth of countries but also countries need to protect themselves from its harmful effects.