International Trade: Benefits, Key Factors, Trade Barriers, and Location Options

This presentation covers the concept of international trade, benefits of globalisation or production, key factors to consider when locating abroad, trade barriers, and ethical/environmental factors to consider before finalizing plant location decision.

INTERNATIONAL
TRADING

INTERNATIONAL TRADE

International trade refers to the
branch of economies that are
concerned with the concept of
exchanging goods and services with
the foreign nations.
The sale and the purchase or the
exchanging of the goods and
services all over national boundaries
(Jones & Kierzkowski, 2018)

HOW COMPANIES BENEFIT
FROM GLOBALISATION OR
PRODUCTION
 Outward orientations are increased
 Transfer of the technologies
 Spill over of the productivity
 The processes of production are improved
(Baylis, Smith & Owens, 2017)
 The competitiveness within the domestic
industry is increased

KEY FACTORS TO BE
CONSIDERED BY A COMPANY
IN LOCATING ABROAD
 Total landed cost
The trade regulations of the target country
The value added services
Location for the business
The landed capability
 Potential finances for the business there
Supplier responsiveness
Quality of the products
Customer preferences

TRADE BARRIERS
 Tariffs
Subsidies
Quotas

HOW TARIFF WORKS

REASONS BEHIND TRADE
BARRIERS
 Infant industry
Unfair trade
Domestic employment in the country
There are low foreign wages (Mansfield &
Reinhardt, 2015)
The national security

DATA TO BE COLLECTED
BEFORE EVALUATING THE
LOCATION OPTIONS
The data on how the product of the company
would sell in a particular geographic location
Geographical trends
Demographic trens

ETHICAL AND ENVIRONMENTAL FACTORS THAT
THE UNITED STATES FIRM SHOULD CONSIDER
BEFORE FINALIZING THE PLANT LOCATION
DECISION
 Availability of the resources and the raw materials
 Nearness of the market
 Transport facilities
 Labour availability
 Fuel and power facility
 Water availability
 Government approval
 Approval from local people
 Government policies
 Suitability of the climate
 Disposal of waste (Feenstra, 2015)

REFERENCES:
Jones, R. W., & Kierzkowski, H. (2018). The role of services in
production and international trade: A theoretical framework. World
Scientific Book Chapters, 233-253.
Baylis, J., Smith, S., & Owens, P. (Eds.). (2017). The globalization of
world politics: an introduction to international relations. Oxford
University Press.
Mansfield, E. D., & Reinhardt, E. (2015). International institutions
and the volatility of international trade. In THE POLITICAL ECONOMY
OF INTERNATIONAL TRADE (pp. 65-96).
Feenstra, R. C. (2015). Advanced international trade: theory and
evidence. Princeton university press.

THANK YOU