International Trade Introduction

Introduction to International Trade

Course Notes – Week 1

Chapters 1 &2

Our first view of International Trade is a brief summary of some of the conditions and factors that make international business much more complex than buying and selling domestically. Currency, culture, language, legal and political differences, security, payment and collection, many transportation and logistics complications, insurance, dispute settlement, and even something as fundamental as varying degrees of sophistication of business support systems and organizations can sizeably increase the requirements for care and expertise and, consequently, the levels of risk for the parties involved.

Some factors to watch as they impact international trade include:

1. Technology, as its ever-increasing rate of evolution changes how international business is conducted;

2. Trade routes and trade priorities evolving, as focus on specific commodities and services changes, as does the identity of the key players and trade directions;

3. The shift towards oligopolies in practically every product or service industry. There are very few areas of business worldwide unaffected by this phenomenon, as mergers and acquisitions create industries populated by a few giant companies, and many very small, niche-targeted firms. The days of the mid-sized company seem to be numbered;

4. The trend toward a melding of what were once considered two very separate and distinct international business activities, i.e. trade and foreign investment. We now see these activities being assessed together, as components of a single business strategy, by members of both private and public sectors.

The emergence of new international trade powerhouses during the past 10-15 years has completely changed the landscape. China, India and the replacement of individual European powers by the now well-established EU have altered the identities of the key world economic forces. Many of these changes have been...