Assessing UK's Economic Environment: Globalization Advantages

This report assesses the UK's economic environment, focusing on how UK policymakers can navigate international trade and cross-border investment challenges. It examines policies related to tariffs, subsidies, and export restrictions, highlighting the benefits of international trade, including specialization, foreign direct investment, access to cheaper imports, increased investments, and wider access to inputs. Furthermore, the report discusses the key disadvantages of globalization on UK firms, such as inflation, unemployment, tax avoidance, shifting sectors/structural unemployment, and trade imbalances, ultimately concluding with recommendations for UK firms to leverage international trade for profit maximization. Desklib provides this and other solved assignments to aid students in their studies.

The Economic Environment
Assessment Strategy

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
1. Discussing the UK policy makers can ensure that factors does not happen in UK.................3
2. Discussing Five key advantages of globalization on UK firms...............................................5
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Economic environment is the environment which includes the external factors of the
economics that used to influence the buying behaviour of the customers and business and affects
the performance of the company. This report will outline that the UK policy- makers can ensure
that factors does not happen in UK which are evaluated in the report. Further this report will
outline the benefits of the international trade in order to attain the profits. At last this report will
outline the five key advantages of globalization on UK firms.
1. Discussing the UK policy makers can ensure that factors does not happen in UK
International trade and the cross border investments has created the threat of globalization
in the markets. The policy- makers is the broad term that used to cover the responsibility of the
people in order to formulate and amend the policies of the economy (Ballicu and et.al., 2022). At
the national level it includes the Ministers with their advisers, civil servants, MPs Lords and the
other advisory staff. There were many policies that the UK policy- makers can ensure that this
not happen in the UK which are as described below:
1. Tariffs and other trade barriers: The common barrier to have trade is the tax on
imports. By having the tariffs it increases the prices of the imported good as
compared to the domestic goods: The UK policy- makers has make the best
policies which helps the country to have the smooth flow in the global market. As
the UK has no such trade or investments barriers. The country also not have any
restrictions on the transfer of the capital or on the repatriation of the profits.
2. Subsidies to UK business: The export subsidy used to reduce the price give by the
foreign importers which concludes that the domestic customers to pay more than
compared to the foreign countries. By having the subsidies it will make the goods
cheaper to produce relative to the foreign markets. The policy- makers of the UK
will help the business to have the financial support by having the new subsidy
control system. By providing subsidies to the business of the UK will have them
to produce the goods at the lower rates.
3. Policies related to produced over foreign goods and services: As there is no
significant policy related to the produced over the foreign goods. The UK policy-
makers must ensure that this is not happened in the market of UK (Côté, Estrin

and Shapiro, 2020). The foreign goods and services are the things that is imported
from the other countries and these are affected by the trade barriers.
4. Polices that restrict exports in UK: In order to have exports in the UK the policy-
makers has the various restrictions. The exports prohibition and restrictions makes
the company to not to have the export those particular goods in the global market
(Friel, Schram and Townsend, 2020). There are certain restrictions that are placed
on the good which are exported from the UK which includes the strategic goods,
cultural goods and controlled drugs and precursor chemicals. In order to sell these
products outside the UK the licence is required or the permission of the policy-
makers or government is required.
Benefits of international trade are as recognized below:
1. Specialization: Specialization refers to the system which helps the countries in
order to specialize in the products and services which they used to trade in the
global market (Fusacchia, Salvatici and Winters, 2022). By having specialization
it used to encourage the trade between the different countries because it helps the
country to get the same products which they were not producing in the same
country. The international trade is the best way in order to have specialization in
the global market.
2. Foreign Direct Investments: FDI stands for the Foreign Direct Investments
which means purchase of an interest in the organization by organization or by the
investor which are located outside the borders of the different countries. This is
the most important term which is used in the order to have the international trade
in the global market. By having FDI' s it allows the UK firms to have direct
involvements with the day to day activities of the different countries. The foreign
direct investment used to go beyond the requirement of the capital. It basically
includes the provision of the management, technology ad the equipments. The
characteristics of the FDI is that it used to establish the effective control of the
businesses of the foreign and have substantial interest in the decision- making.
3. Access to cheaper imports for consumers and households: By having the
international trade it increases the number of goods that the same country can
choose from. This will result in the decrease in the cost of goods and increases the

competition and make the countries to have international trade (Hayakawa and
Mukunoki, 2021). By having the exports in the different global market will help
the UK to have the cheaper imports for their consumers and households.
4. Increased in investments and exploitation of economies of scale: By having the
international trade it will help the company to increase in their investments. By
increase in the investments and by having the international trade will help the
economy to attain the objectives and goals. By having the international trade it
will help the UK economy to have the economies of scale. As economies of scale
will help the market to have the cost advantage by having the large production.
The organization can gain the economies of scale by increasing the production by
lowering the costs. This will is the big benefits to the firms of the UK to produce
more have international trade in the different global markets.
5. Firms to benefits from wider access to inputs: The organizations are having the
benefits in order to have the international trade. By having the international trade
it will help the organization to gain more profits in the global markets (Hulme,
2021). The organization must add the best countries in order to sell its products ad
raise the revenue of the company.
2. Discussing Five key advantages of globalization on UK firms
The globalization refers to the system which used to describe that how the trade and
technology has made the different countries more connected and interdependent place.
Globalization includes the increase in the integration and the interdependence of the global
economy. This will leads to the rise in the trade It is the process which helps the organization
and the people to move its products and services across the different borders. As there are
different firms which may affected by having the globalization. The disadvantages of the
globalization on the UK firms are as follows:
1. Inflation: The term is defined as the decline in the purchasing power of the
currency over time. It is basically the quantitative estimate of the currency rates at
which the declining purchasing power is reflected. By having the globalization it
will increase in the inflation in the economy of UK. This used to affect the firms
of the UK by increase in the inflation rates (Luukkainen, 2018). This will also
affect the profitability of the organization as they will be manufacturing the goods

at the higher rates by having inflation. The inflation is the worst thing theta the
economy faces in order to manage the rates of the goods and services in the
market. There is the great effect of the inflation on the international trade which
has affected the profits of the economy. When there is increase in the price of the
products in the country, the good produced in the country will become more
expensive.
2. Unemployment: This term is defined as the individuals who are willing and able
to work but are not getting and unable to find the job. The person and individuals
are searching for the job, but they are unable to find the jobs in the markets of
UK. The problem in the UK economy is that the many workers were left behind
by having the globalization which leads to the problem unemployment (Noja,
Cristea and Yüksel, 2021). This makes them feel that the globalization helps the
firms to have more profit. As the workers left behind this will affect the
organization of the United Kingdom.
3. Tax avoidance: Tax avoidance is refers as the legal method that is used by the
taxpayers in order to minimize the tax amount to have globalization of its
products and services. The By having the globalization it has enabled the
organizations to shift their production from the high tax countries to the lower tax
countries. This used to have decrease in the profits of the economy of the UK. For
example the organization like Amazon, Apple and google has taken the great
advantage by supplying its products in the Bermuda, Luxembourg and Ireland at
the low tax rates. This shows that the UK economy used to lose the tax on the
profits arising from the globalization. This makes the UK firms to have big
disadvantage in order to have globalization with the different countries.
4. Shifting sectors/ Structural unemployment: The globalization will result in the
shifts in the different sectors of the economy of UK. As it is seen that the United
Kingdom has no longer comparative advantage in the many manufacturing
industries. This is because in the developing countries has the great advantage in
order to bring the labour at the lower costs (Wiedmann and Lenzen, 2018). By
having this process, it will lead to the shifting sectors and the structural
unemployment in the UK economy. The problem in the UK economy is that the

many workers were left behind by having the globalization which lead to
unemployment. This makes them feel that the globalization helps the firms to
have more profit. The workers in the UK economy used to struggle in order to
find the new jobs which includes the job security, pay and other benefits.
5. Trade imbalances: The trade imbalances happens when the market exchange
used to receive too many orders of the one kind but the products are not available.
This is basically occurs when there is imbalance between the country's savings
and rates of investments (Xu and et.al., 2020). Globalization and increased in the
trades of the goods and services will affect the firms of the UK. But by having the
extra trade in the global market will help the organization to gain the competitive
advantage in the global markets. The organization must focus on this factor as it
will help them to manage the trade imbalances in the market. The countries who
used to take more goods and services rather than having export used to face the
trade imbalances or may have the negative trade balance. This used to affect the
profitability of the firms in the UK.
CONCLUSION
From the above report its is concluded about the UK policy- makers can ensure that
factors does not happen in UK which are evaluated in the report. These factors includes the trade
barriers, policies restricted in export of UK, subsidies of UK business, etc. Further this report has
evaluated about the benefits of the international trade in order to attain the profits. At last this
report has described about the five key advantages of globalization on UK firms which includes
the inflation, unemployment, tax avoidance, shifting sectors/ Structural unemployment and trade
imbalances. The UK firms must focus on these above evaluated factors which will helps the firm
sin order to attain the profits by selling is products outside the country.

REFERENCES
Books and Journals
Ballicu, G. and et.al., 2022. International Trade, FDI and Productivity. Covid-19 and
Productivity. p.47.
Côté, C., Estrin, S. and Shapiro, D., 2020. Expanding the international trade and investment
policy agenda: The role of cities and services. Journal of International Business
Policy. 3(3). pp.199-223.
Friel, S., Schram, A. and Townsend, B., 2020. The nexus between international trade, food
systems, malnutrition and climate change. Nature Food. 1(1). pp.51-58.
Fusacchia, I., Salvatici, L. and Winters, L.A., 2022. The consequences of the Trade and
Cooperation Agreement for the UK’s international trade. Oxford Review of Economic
Policy. 38(1). pp.27-49.
Hayakawa, K. and Mukunoki, H., 2021. The impact of COVID-19 on international trade:
Evidence from the first shock. Journal of the Japanese and International
Economies. 60. p.101135.
Hulme, P. E., 2021. Unwelcome exchange: International trade as a direct and indirect driver of
biological invasions worldwide. One Earth. 4(5). pp.666-679.
Luukkainen, P., 2018. Renegotiating International Trade Relations: The Impact of Brexit on the
UK Trade.
Noja, G. G., Cristea, M.S. and Yüksel, A., 2021. Brexit spillovers through international trade and
foreign investment: empirical evidence from EU-27 and the UK. Panoeconomicus.
68(5). pp.653-680.
Wiedmann, T. and Lenzen, M., 2018. Environmental and social footprints of international
trade. Nature Geoscience. 11(5). pp.314-321.
Xu, Z. and et.al., 2020. Impacts of international trade on global sustainable development. Nature
Sustainability. 3(11). pp.964-971.