International Business

Essay by mswil81University, Bachelor'sA, January 2008

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International trade is also commonly known as global trade. One of the many influences from globalization is that it is a trading activity that involves several people in different countries. People start to think and do everything globally, and internationally. The importing and exporting that people have been doing for many years can also be considered as international trade. But recently, with the globalization effect, people are beginning to get active about international trade as they realize that the global market can give more profit to their business than just trying to do business locally.

Trade and world output.

Trade is what allows countries the ability specialize in certain goods or services in which they may have a comparative advantage over other countries. When countries trade with one another, it provides a greater sales opportunity. With greater sales opportunity then it creates more output. It also provides a country with a broader choice of goods and services.

(Wild, Wild, Han pg.153) This in turn increases the overall output globally. World output can be described as the total amount of goods that are produced by all the countries in the world. The amount that the world outputs in a year has a dramatic effect on the level of international trade in that year. (Wild, Wild, Han pg.154) When a country's economy is not doing so well, (recession) its currency tends to be a lot weaker than other nations. Tariffs are also increased to protect domestic industries. The result is that the imports are more expensive than the products that can be found domestically. (Wild, Wild, Han pg.154)The broad pattern of international trade.

Trade increases world output by creating efficiencies of scale. Most countries have a customs agency that keeps record of the destinations of exports and the source of imports. This...