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Globalization and International Trade

Globalization and International Trade


The class of Introduction to International Trade has been enlightening, particularly in relation to two ideas—globalization and international trade and the cultural environment. The two topics are much related because as a business globalizes, it experiences different cultures that it needs to familiarize with.

Globalization and International Trade

By definition, “globalization” is the growing mutuality of countries as a result of the growing consolidation of trade, finance, populations, and philosophies in a single global marketplace.  Evidently, globalization has considerably enhanced economic development in East Asian economies, including that of China, Korea, and Singapore. However, not every developing nation is equally apace in terms of globalization or likely to benefit from it. As a matter of fact, except for most some nations in Latin America and most in East Asia, developing nations have been considerably slow to be incorporated with the global economy. This was among the first ideas I learned about Globalization and International Trade.

Another point I learned is that for the nations actively involved in globalization, the gains are coupled with new risks and disputes. Among the most debated topic is the balance of costs and benefits of globalization for various groups of nations and the global economy. For the involved nations, the key gains of unlimited foreign trade are based on the enhanced access of their producers to bigger, transnational markets. A related concept is that a local economy has an opportunity to benefit from access to international division of labor. However, such economy stands a risk of experiencing a much stronger competition in global marketplace. It is also important that an actively trading nation gains from the new technologies that bubble over to it from its trading counterparts, for instance, through the knowledge that comes with imported production equipment. Such technological bubble over are especially significance for developing nations since they present them with an opportunity to catch up with the developed nations more quickly in terms of productivity.

I learned that globalization has its challenges too—active engagement in global trade has risks, especially those related to the fierce competition in global marketplace. For instance, a nation faces the risk that parts of its industries, especially the less competitive and adaptable, will be driven out of business. Additionally, authorities of developing nations much debate that industries established recently call for transitory protection until their competitiveness increases and become less vulnerable to international competition. For that reason, authorities often ban or cut down specific imports by bringing in quotas, or making imports costlier and less competitive by enforcing tariffs.

A country that tries to produce almost all that it needs, it domestically impoverishes itself of the tremendous economic gains of global specialization. However, narrow transnational specialization that makes a country contingent on exports of a few goods can as well be risky based on the likelihood of emergent unfavorable fluctuations in demand from the global marketplace. Such fluctuations can considerably a nation’s terms of trade worsen. When studying this subject matter, it became apparent that the main worry for transition economies is finding their position in the global division of labor. In many instance, that exertion implies diversifying the organization of exports, especially to developed nations. Another challenge associated with Globalization and International Trade has to do with Cultural Environment, but it is not always a challenge per se.

Cultural Environment

In the business world, sometimes culture is regarded as a variable that can be quantitatively evaluated. However, realistically, culture has an influence on each of the aspects of international business in a manner that withstands quantification and may be hard for foreigners to penetrate. A business organization’s culture, including its integration in its national culture and the level of receptivity to other cultures, is a factor that has growingly become important in global trade. The growth of affiliates, divisions, networks, confederations and other cooperative engagements, including joint ventures, has made it imperative for cross-cultural understanding. While global economies advance, women have a higher probability to be hired outside their homes, even in other countries far from their own. However, lack of equal access to educational opportunities, health, remunerations and political agency continue to exist. Besides, the fluctuating markets present excellent forecasts for development, but are diverse in terms of culture as well as levels of income.

Most of the societies in the world are multi-cultural, and appreciating the patterns of convergence and divergence within them is significant to the success of an organizational in different national and cultural settings. In fact, I learnt that any consideration that globalization would make distance inapt, now looks misplaced. Besides, economic development comes with advanced consumer way of living to developing nation across the world, making up a sort of intersection that promoters of globalization foreshadowed. However, these societies are developing in directions that mirror their own internal cultures as well as values, in addition to diversity at the national level. Therefore, I was confident to conclude that cultural diversity is intermingling more and more with social as well as economic divisions, which brings about not only the creation of challenges, but of opportunities for global trade.


Despite all the benefits and challenges of Globalization and International Trade, it is important to note that its costs and gains also hinge on such factors as the size of a participating nation’s domestic market, its location, as well as the endowment of its natural resource.

Jun 27 2012 , 3:07
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