Essay Example on International Business: Exploring the Impacts of Global Trade

Introduction

The concept of international business and trade is built from the idea that all countries want to expand their markets for goods and services hence enabling them to have access to products that may not have been available domestically. As a result, international trade occurs with a fundamental aim, which is the promotion of goods, services, resources, people, and ideas across boundaries. From understanding the concept of international business, one will be able to understand the impacts of the activities named above have on domestic and foreign markets, countries, governments, and global are institutions. The success of international business conducted all over the world comes from the ability of different players to cope with uncertainties and risks. The probability of occurrence of these two elements is high due to the continuously changing state of the global market. The current essay discusses more international trade and business by analyzing its historical overview and also providing a new and future outlook of the worldwide phenomenon. Historical Overview of International Trade and Business

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The exchange of goods and services among different people is a practice that has existed in the world since the old ages. However, for international trade to lives, the individuals who partake in it need to be from different nations. The emergence of international trade was attributed to the rise of modern nation-states during the close of the middle ages in Europe. The earliest discussions on the existence of international trade began with a nationalistic body of thought known as mercantilism (Dorobat, 2015). The latter is an economic theory and practice that existed and was common in Europe during the 16th and 18th centuries. The philosophical model promoted the introduction of government regulations of a nation's economy. The scenario above was attributed to the fact that countries wanted their state power to be augmented at the expense of the rival nation's capabilities. The mercantilism model adopted by countries enabled governments to sought for measures that would ensure their exports were more compared to their imports. From the process, the states will have the ability to earn much wealth in the form of gold and silver at the expense of other nations.

Towards the end of the 18th century, a strong reaction against mercantilism began to take shape. In countries like France, economists known as physiocrats wanted liberty in production and trade. In England, some economists urged the abolition of trade restrictions since they would benefit all countries partaking in the trade practice. Furthermore, a lot of economists and business people all over Europe were against the high and prohibitive customs that existed, making it difficult for them to engage in trade practices. The change of heart and minds of economists and people in business enabled the emergence of liberal ideas, which led to the creation of trade agreements with different foreign countries (Dorobat, 2015). The introduction of liberalism in international trade enabled various trade agreements to be formulated by states in an attempt to secure their interests. One of the earliest trade agreements formed was the Anglo-French agreement of 1860, which reduced French protective duties to 25% and ensured that the country would export all its products to Britain except wine.

In part, later part of the 18th century, the concept of protectionism emerged as a reaction in favor of protections that spread through the western worn. The idea was first introduced by Germany and then later followed by other nations (Dorobat, 2015). After 1860, the United States was among the countries that raised its duties sharply due to the civil war. The only county that remained trues to the concept of free trade was Great Britain. The onset of World War 1 saw countries slowly returning to earlier models of mercantilism by seeking to build wars around their countries for purposes of protecting themselves against the impacts of the war. By the end of the war, world trade had been disrupted a lot to points that made it difficult to achieve recovery. What followed afterward was an economic downturn that encouraged countries and traders to form the first world economic conference. Even though some agreements were created during this conference, they were not effective as much since the economic depression of the world integration continued till the 1930s (Dorobat, 2015). what followed was the introduction of the theory of comparative advantage that sums up to what our current knowledge of international trade. The model suggested that a country will only produce and exports goods and services that it is best at based on its specialization and gives another country to import products that of its specialty. As a result, the model of comparative advantage has provided a robust argument to the existence of free today that is adopted by all countries.

Current and Future Outlook of International Trade and Business

The current future of international trade is compounded by policies and agreements that have been formed by various countries. After the end of world war II, the global economy experienced unprecedented growth income gained and the trade being conducted. The scenario was attributed to factors like the decline in the cost of information and communication, growth of technology, and political developments like the integration of all parts of Europe and Asia into a global market (Yushkova, 2014). Current indications of international trade suggest that it is a significant diver of growth for any country. Economic projections of the world indicate that global trade growth is on a downturn, which is attributed to the financial crisis of 2008. After the crisis, the world economy slowly recovered, but the growth trade never regained its momentum as compared to the previous rates.

Critical Issues and Threats of International Trade

There is a various critical issue affecting global right now even though it is more interconnected and streamlined than ever before. Some of these issues that are emerging have made it difficult supply chain in the world to operate at optimum levels. One of these issues is rising tariffs of international trade. A country like the United States has vast economic power and influence that make it a leader in global business. However, under the current administration of President Trump, the country has engaged in trade wars by using tariffs as its primary weapon. The situation has made it difficult for global trade between the United States and China. In his current presidential term, Trump has imposed an increase of tariffs of between 10% to 25% on Chinese goods worth billions of dollars imported in America (Mantzopoulos & Shen, 2019). Some of these products include solar panels, aluminum, steel, and many others.

In responding to the actions taken by President Trump, China also imposed tariffs on American goods worth hundreds of billions of dollars. However, current indication suggests that American has more tariffs on Chinese products as compared to China on American goods. The tit-for-tat scenario between China and trade in global trade does not seem like it will end sooner. The latest move by China has made in response to the trade war is imposing a ban on all American agricultural products (Mantzopoulos & Shen, 2019). Furthermore, China has taken measures to devalue American currency so that it can win the trade war with America. The trade war between these two nations is interfering with the free flow of the overall global since they control two of the largest economies of the world. As this trade war continues, its consequences will be felt in many nations leading to the decline of the global economy.

Another issue affecting international trade is the theft of intellectual property and counterfeiting. The current Trump administration has continuously accused China of participating in the theft of intellectual properties through actions like cyberattacks and forced technological transfers. Other nations have also accused the Chinese of indulging in the production counterfeited products for global brands hence affecting the whole concept of international trade (Mantzopoulos & Shen, 2019). Although China's president has expressed his disgust and contempt for these actions of some of his citizens, the issue is still persistent as more intellectual properties are stolen, and products of various brands are counterfeited. The last item that has emerged as a significant threat to international trade is the confiscating of shipments by governments of different countries. For instance, Trump's sanctions imposed on Iran oil shipments has caused the country to retaliate by seizing shipments coming from America.

Opportunities for International Trade

Even though international trade is being faced by many issues that threaten its existence, there are still many opportunities available that can make it better while going into the Future. For instance, the increase of modern technology has made it possible for international trade to continue thriving (BULL et al., 2019). The rise of contemporary technology will require a country to harmonize their domestic regulations. The process will enable countries to come up with a consensus on how to deal with issues of data protection and delicate privacy issues. Furthermore, the World Trade Organization is making amendments that will allow countries to make plurilateral agreements. Members of the WTO would be able to adopt new rules to international trade if they chose it.

Contemplation on a positive future of international trade will only be possible through the cooperation of all countries of the world. Growth of global business, especially in services, will only be achieved if countries with similar economies sign regional trade agreements that will accomplish various objectives like mutual benefits are reached. If the threats to international trade identified above are eliminated, then the resultant feature will be the growth of the global economy.

References

BULL, R., MAHBOUBI, N., STEWART, R., & WIENER, J. (2019). NEW APPROACHES TO INTERNATIONAL REGULATORY COOPERATION: THE CHALLENGE OF TTIP, TPP, AND MEGA-REGIONAL TRADE AGREEMENTS. Law & Contemporary Problems, 78(4), 1-29. doi: ISSN: 0023-9186

Dorobat, C. E. (2015). A brief history of international trade thought: From pre-doctrinal contributions to the 21st century heterodox international economics. Journal of Philosophical Economics, 8(2), 106-137.

Mantzopoulos, V., & Shen, R. (2019). AN ANALYSIS OF A TRADE WAR WITH CHINA. Journal Of Business & Behavioral Sciences, 31(2). doi: ISSN: 10995374

Yushkova, E. (2014). Impact of ICT on trade in different technology groups: analysis and implications. International Economics and Economic Policy, 11(1-2), 165-177.