Question

Explain the positives and negatives of international trade. Include the domestic impacts of importing and exporting; and also the impacts to GDP, Inflation, and Unemployment.

Answer 1

POSITIVES AND NEGATIVES OF INTERNATIONAL TRADE

Positives:

1.​​​​​For the international growth, the international trade will establish a well foundation.

The companies can achieve the growth only by involving in exporting and importing.The company got sustained revenues from various customers in the several markets,rather than limited customers in the single market.

2.​​​​ The International trade will help to improve the financial performance.

While circulating the company products in global market , it will boosts the financial performance of that brand and businesses.

3. Amplifies the market competitiveness.

The market competitiveness influence the international trade in positive manner . While observing larger ranges of trends in market, the businesses will focus on the quality, design and product development.

Negatives:

1.​​​​ Political Risk

In an international trade there is always involving a political Risk. Due to the changed in the domestic politics overtime,the government can change the laws and regulations in unfair manner. It will seriously effect the international trade.

2.​​​​​ Cultural complications

Other limitation in the international trade Involves the cultural complications. The various countries have various cultures,eexpectations, standard,etc.So it creates some problems in businesses and brands.

3. Language Barriers

The language being the large limitation of international trade. Different countries will having their on domestic languages. It is neccenece to implement a translation system in International trade.

Impacts of International Trade in GDP :

GDP means Gross Domestic Product. It is the quantitative measure which calculates the nation's total economic activity . International Trade having the great impact in GDP. GDP of a country will flourish only when there is a trade surplus, which means that the total value of the goods and services that we exporting will exceeds than the goods and commodities that we imports.

Impacts of international trade in inflation

Initially by the influence of exchange rate, the inflation will affect the import and exports in international trade. Due to the higher interest rates , the inflation will shoot up and result in weaker currency. This increasing cost will having an substantial impact on competitiveness of exports in the international trade.

Impacts of international trade in unemployment

There is an arguable and compound relation between International Trade and the Unemployment. As compared to the import-competing sector, the export sector will having the higher or lower unemployment rate, the aggregate unemployment rate may increase or decrease