INTERNATIONAL TRADE ADVANTAGES AND DISADVANTAGES

Nowadays, the majority of people do not imagine their lives without international goods and services. International trade is referred as a mechanism where goods and services can be traded freely among different countries and economies without artificial restrictions being created by the government. It's a way of diversifying the markets with different goods and services available in different parts of the world. All in all, international trade has a lot of advantages and disadvantages.

Firstly, there are many different arguments concerning economic, political and environmental issues, which support international trade.  The main advantage for international trade is that it encourages market competitiveness. When a brand and business competes in several markets simultaneously, then it must focus on its competitiveness for it to be able to thrive. By observing a larger range of trends because of their greater level of global market access, brands and businesses can focus on quality, design, and product development improvements, so, that they can continuously improve and diversify. Also, it spreads out the risk a brand and business must assume. Organizations can better protect themselves from risk thanks to international trade because of the amount of diversification that can be achieved.

Whether it is a financial disaster, like the Great Recession of 2007-2009, or a natural disaster, like Hurricane Katrina, a company with an international presence can survive and even maintain profitability without domestic customer support. Another advantage is the sharing of technology, where the countries who are working together could share their technology with one another, for example, The United States and India, where the United States has higher and better technology.

Furthermore, the manufacturing companies get better value for their products because if had there been no global trade they would have been forced to sell the product in local markets at any price due to limited demand. Also to my mind, it is very important that international trade fosters peace, goodwill, and mutual understanding among nations. Economic interdependence of countries often leads to close cultural relationship and, thus, avoid war between them.

On the other hand, international trade has certain disadvantages, as well. First of all, the biggest disadvantage of international trade is that it leads to exploitation of importing country by the exporting country, as importing country is price taker and therefore it has to pay the price fixed by the exporting country. For example, crude oil cannot be produced by every country and that is the reason why crude importing countries are at disadvantage all the time due to near monopoly of oil exporting nations. Another disadvantage of international trade is that sometimes countries export harmful products to other countries, leading to damage to environment of importing country and hence international trade poses environmental hazard for nations doing international trade.

Also an important problem is that the gains from trade are not equally distributed. There is a general feeling that a major part of the gains from trade are concerned by the North, i.e., developed countries. Besides, international trade sometimes ruins domestic industries and competition. Moreover, international trade also presents cultural complications.  Different cultures have different attitudes, standards, and expectations that can create problems for a brand and business. Failing to consider the expectation a different culture, may have lead to make mistakes that damage the reputation of the brand and can be very costly to the bottom line. Something as simple as inappropriate packaging can be enough to permanently damage a brand’s reputation.

To sum up, international trade maybe useful at most times but has disadvantages at the same time, as well. However, international trade is still widely used by all countries in the world because most countries need to depend on one another to get the things they want. Nations with strong international trade have become prosperous and have the power to control the world economy. I believe, that the global trade can become one of the major contributors to the reduction of poverty.

Akvilė Pancekauskaitė

[artigo de opinião produzido no âmbito da unidade curricular “Economia Portuguesa e Europeia” do 3º ano do curso de Economia (1º ciclo) da EEG/UMinho]