What Factors Affect the Growth of International Trade?
A wide range of political, economic, and practical factors can affect the growth of international trade. Many nations have a variety of legal regulations to which businesses must conform before engaging in trade internationally, and some nations even have economic policies that strongly discourage it in favor of a more internally-focused economy. Practical concerns include the availability of resources and the ability to produce products or materials that are desirable on a global level. Communication is also important, as technology such as the Internet now allows for nearly-instantaneous communication around the world, thereby allowing businesses to market their products and services globally with relative ease.
Political policies and other government concerns, such as the relationships between trading nations, are highly important to the growth of international trade. A politically stable nation with few policies restricting international trade will likely be able to expand its worldwide trade rapidly. Political instability, however, particularly when it leads to violence, can be a major barrier to trade growth — many nations place steep tariffs on exports or imports from certain nations or industries for such reasons. While such tariffs can be used to protect fledgling industries or to place political pressure on some nations, their overall effect on international trade is often negative.
The economic condition and economic policies of a given nation are also important factors that affect the growth of international trade. It can be difficult for a business in a country suffering from a recession or depression to enter into international trade. An economically healthy nation, on the other hand, provides an excellent foundation for entry into international markets. In such conditions, it is generally easier for businesses to obtain loans and to attract investors, greatly increasing their ability to expand into global trade. The growth of this trade, then, is largely dependent on the economic condition of the nations engaged in trade on a global scale.
Rapid global communication by telephone and over the Internet is a major factor affecting international trade as well. Face-to-face meetings can be held from different sides of an ocean with video conferencing technology, for instance. Such communication technology promotes the growth of global trade by providing an easy way for businesses to market their goods and establishing a rapid method of communication between business partners around the world. In many cases, for example, it is possible to order goods or services from another country simply by filling out a form on a website.
This is a current article. I would have loved to read more about how technology plays a factor in international trade, even within politically unstable countries. Overall, great article!
Poor countries can't really trade because they don't produce much. Many African countries for example are only able to export one or two types of products because that's all they produce. Conflict and poverty prevents these countries from producing and manufacturing so they are not able to compete with other countries in trade.
@anamur-- Yes, some countries do intentionally limit or prevent the growth of international trade and they do it for different reasons. The cause might be ideological, such as if they don't like the ideologies of the countries that they can trade with. Or they might not want to become dependent on other countries for goods.
I think putting in place really high import tariffs is the number one way of discouraging people from trading with you. Countries can also put export tariffs to discourage their own businesses from selling to other countries.
I think this is for the most part rare though. You are right that trade is good for the economy and for development and most countries that have the capability of participating in international trade will. In my opinion, a country really can't prosper without trading.
This is a really helpful article.
Can someone tell me why do some countries discourage international trade? And in what ways can they discourage it?
I'm writing a paper on this and I don't understand why some countries don't like trade. I think of trade as a good thing that makes countries wealthier so I don't understand why anyone wouldn't want to participate in it. Any ideas?
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