Question

Write a three to four page paper analyzing the financial and economic realities that relate to international marketing. Ensure you include the three major subject areas: barriers to international trade, how and why governments encourage foreign investment, and important facets of the politics and impact of international trade policies.

Answer 1

International trade is the exchange of goods,capital and services across international borders and it forms a major portion of a country's GDP.International trade mostly comprises of physical goods.It provides a country with the goods that it generally doesn't produce, with those goods which it produces in abundance,with countries engaging in international trade. It raises the standard of living for the people of that country and allows them access to goods produced by people across the world. It creates job opportunities.Almost all kinds of good are traded wines,fruits,vegetables,chocolotes,oil,spare parts,clothes etc. Along with goods, services are also traded like tourism,banking,consulting and transportation.

now on one hand international trade boosts economic growth it can also hinder the local businesses,as they now have to compete with foreign producers.

so in order to hinder the access of foriegn competitors to the local markets they adopt several strategies/barriers to international trade:

1) monopoly: monopoly is a serious entry barrier that prevents outsiders from venturing into the economy.

monopoly means they are sole producer of goods and services and they can do thsi either by government protection or takeover of the competitor. they control the distribution routes and develop pricing strategy and if the new company doesn't find cost effective strategies of supplying their product then they might not enter the market to suffer losses.

legal protection: if the foriegn competitor doesn't get legal protection in the country in the form of patents and copyrights, then they might not venture into the economy than suffer losses.

strategies to follow: the foriegn companies must kepp in mind that they can survive and business succeeds anywhere all over the world, but by joining hands with the local producers who knows the conditions of the economy might be in their favour. however, working in a country where their are monopolies they may want to differentiate their products from these monopolies otherwise all th invested money will go into sunk costs.

how to encourage foriegn investment:

The companies coming from abroad and investing in host economy are basically investing to derive maximum profits and minimum costs ,so the host country needs to develop certain conditions so that the investing country invests and it helps boost the econmic welfare of the host country.

the country's regulatory framework: the country should have rules and regulations for the commercial transaction happening with the outside world and a proper governing body to enforce these rules and regulations ,which gives confidence to the foriegn investor towards investing so that in case of any disputes , there are regulatory bodies to handles and reach a proper decision.

lower tariff,fewer quantitative restrictions and easy currency convertiblity ,fewer sectoral restrictions have increased the flow of FDI.

why the governent encourages FDI?

FDI is the key ingredient to rapid economic growth. FDI is responsible for the rapid and efficient cross border transfer ,which is the essence of economic development. FDI has proven to be more efficent than other forms of investment that drives the country out of a economic crisis.

important facets of the politics and impact of international trade policies:

trade policies play an important role in deciding the prices of goods and services ,so the impact of the trade policy on prices is crucial.

the higher the import duties and tariffs to protect the domestic producers, the higher will be the prices of the local products for use by the consumers. for a producer on the other hands, taxes and other restrictions imposed in imports raises the prices of their locally produced goods ,which in turn is beneficial to them,but when a tariff induces increase in the domestic prices of the fabrics, the local producers are at a loss due to their cost of production rising.