Free trade, international business and globalisation continue to Essay

Free trade, international business and globalisation continue to increase inexorabley if they are so beneficial to our world and - Essay Example From the point of view of international business, globalization is not a mere sale in the overseas, but an operation in the overseas. Producing companies or the runners of business decide to produce in foreign countries for making this operation successfully. By producing in the foreign countries, the companies obtain access to the preferred inputs and to markets. The cheap inputs may be labor or raw materials like minerals or agricultural products. The relevant implications of the international business or globalization of business is free trade and competition. The overall interest of most of the global companies lies in free access to market. Similarly, the companies support the reduction of investment barriers in the individual countries. The competition is brought by the companies into the markets where there exists a limited number of local producers. The competition may be with local producers or among these companies them selves (Stewadson, 1999). Positive Roles of Internatio nal trade and business in the era of Globalization Free trade in the context of globalization attribute to i) the demand expansion and increasing returns to scale, ii) technological dynamism and investment, iii) specialization of production, technological advances and spill over, and above all to the iv) employment generation in a country, where the multi national countries produce or run the business. The goods and services which are produced locally have access to a larger market and the demand expansion effect of trade make the economy capable of overcoming the constraints of its local and domestic market size. The increasing returns to scale as a result of access to international markets can further reinforce the benefit of operating at a higher output level. The manufactured goods propose better prospects for export earnings by allowing for a more rapid productivity growth and production expansion and also offer the promise of greater price stability as volumes expand, thereby avoiding the declining terms of trade which hinders the long run economic performance of many developing countries (UNCTAD 2002) Trade leads to acquisition of newly affordable goods that are necessary for technological dynamisms, poverty reduction and increasing economic development. Those goods would not available unless export or import occurs properly and even if they are available, those may not be for the scarce domestic resources. If the foreign earnings from exports are appropriately re-invested, competitiveness would be enhanced and this leads to expansion of exports and greater investment. Trade with sufficient strategic support, incentives and guidance of the government can lead the economy to industrial diversification and other crucial economic development. The experience of South Korea is very relevant in this context. Export earnings have been used to import the selective capital goods and technologies which led to the inception of new and outstanding industries (in wh ich the country had any initial comparative advantage) which are internationally competitive (for eg., Steel and Ship Building). The trade theories indicate that a nation exports the commodities which are produ