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3107 - Term Paper Example

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Trade carried within a nation is referred to as home trade while international trade entails the exchange of goods and services between nations around the world. Trade…
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Download file to see previous pages... Good infrastructure is between nations have also encouraged international trade. The infrastructures such as those that enhance transport and communication have been regarded as the core determinants of a country development and therefore different nations have invested in them to encourage investors. The forces of demand and supply are the main drive for the international trade. Countries do have special products and services that they do produce in bulkiness and at low cost (Lecture notes chapter 1). These qualities gives the country the power to have a market share in the world market where the sell their commodities. The benefit accrued from the global trade is that the country can get access of the surplus produce and can fill in the deficit of commodities that is unable to produce at a cheaper cost. Development of the information and communication technology across the globe is also a boost to the international trade as people from different regions of the world can do business regardless of the geographical distances.
The increase in trade between two or more countries has also been affected by the international production. Countries have been moving their units of production to countries other countries as seen by the U.S.A firms shifting to China. The reasons for international production are mainly for cost reduction. Firms may move their industries to other countries where the main raw materials are readily available. Setting an industries in the base where raw materials are readily available helps the industry to cut the cost of production by cutting out the cost related to the transportation of the raw materials to the production site. Industries are also shifting to countries where the labor cost is cheap. Most of the international firms from the west are setting up industries in the third world countries where the labor cost is cheap. Cheap labor leads to low production cost and therefore the investors finds advantage of setting up firms in ...Download file to see next pagesRead More
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