LSME504- Global Economy Factors Influencing International Trade Growth

This essay examines the key factors impacting the global economy and their influence on the growth of international trade, with specific reference to Marks & Spencer as an international business enterprise. It discusses the role of natural resources, infrastructure, population, and technological revolution in shaping the global economy and international trade. The essay also analyzes how the global business environment, including competition, technological factors, knowledge transfer, and capital flow, influences the growth and development of international businesses, highlighting the importance of adapting to both local and international environments for competitive advantage.

International business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................5
References:.......................................................................................................................................6
Books and Journals.....................................................................................................................6

INTRODUCTION
International business refers to the trading of goods and services, resources, technology and
the knowledge all across the national borders at the global scale. In the modern world of
globalisation cross border transactions and trading between the two countries has become
extremely common (Czinkota, Khan and Knight, 2021). With the growing technology and
economic development the scope of international business is expanding to a great extent. Global
economy is highly boosted with the international business and trading because the foreign
currency exchange between the countries is the base for higher global economy. International
trade is most important part of a business for which businesses achieve their objectives with the
optimum utilisation of resources. The present report is the discussion of International business
enterprise “Marks and Spencer”. the brand is the British multinational retailer that offers the
customers with food products home products and clothing. Following report will contain a
constructive essay that will identify key factors impacting the global economy and how these
factors influence the growth in international trade. Further in the report contains the analysis of
global Business environment and how it influences the growth and development of international
business.
MAIN BODY
In the modern world globalisation the global economy has transformed significantly over the
past few decades it has changed itself such use manner that is organised and governed by the
collaborating Nations. But there are many repercussions for example once due to the dispute
between UK and EU there was impact on the flow of goods and services between these two
countries and also the movement of people was stopped (Backus, Kehoe and Kydtand, 2021).
Both the countries have fluctuations in international economic systems which have led to the
global economic crisis. Simple words global economy is the interconnection of the world with
economic activities that occurs between multiple Nations. These economic activities either
contain positive or negative impact over the global economy.
There are several factors that impact the global economy and also they are well known
factors that are consistently occurring and changing dynamics of the global business
environment.
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Natural resources are the key factors had major contribution in increasing and decreasing the
global economy. Natural resources contains a double is effect of the global economy as a cause
and intensity of rising the way of a global economy on the other it can increase the depletion rate
too. Natural resources have very limited direct connection with the global economy as they are
used for the satisfaction of human needs by transforming them into the finished products which
enhance the economic value to the society. Basically every country of the globe owns some
unique, precious and economically worthy natural resource that is used as the entity of
international trading and business. When natural resources are integrated with the diminishing
factors then there is very least utilisation of resources that reduces the sustainable growth of the
economy which means the intensive utilisation of natural resources can decline the sustainable
development (Rojek, 2021). The real wealth formation resources capital contributes towards the
fiscal revenue, income and poverty reduction. Sometimes the due to the scarcity of natural
resource and under utilization natural resources are wasted which increases the downfall of
global economy.
Infrastructures are very important factor in order to foster countries economic development
and prosperity. When government of different nations invest in to the infrastructure they are
indirectly contributed to the higher productivity and growth of the country which also facilitates
the trading and connectivity with the other nations and promote economic inclusion. This is the
reason that global infrastructure are highly demanded as the positively impact the global
economy. Infrastructure is one of the most positive factors for the global economy as they are
vital for the economic development and also a key to achieve stable economic growth. When
different countries of the world has a well developed infrastructure is useful as it reduces the
distance between the different regions also it helps in coupling the national market and connect
then at low cost through other economies (Devereux and et. al., 2020). One of the most robust
results of infrastructure to the global economy is that income inequality is declined with the
increasing infrastructure quantity and quality.
Population is increasing rapidly and is also plunging the economy as risk rating the mass
unemployment and under employment. Population somewhere a resource for the labour force but
when there will be major growth in the population and less resources are available for the
employment the labour force will be unemployed which is symbol of bad global economy. The
growth of economy is hampering the global economic development as there is the overuse of the
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natural resources that's causing a threat for future generation survival and sustainability as this
well consequently create a wicked problem of poverty. Due to population growth the per capital
income is recorded the tool is accumulation of the capital with increase in family member and
the mission of the goods scarcity of natural resources and the pressure of population on the land
decline in the social infrastructure, environment, employment rate etc. Thus, in current modern
world the population is not a factor that is good for the global economy as it is slowing down the
process of economic development (Huseynova, Godjayeva and Huseynova, 2021).
The technological revolution is one of the key factors that has created major impact on the
global economy. With the rapid growth in the technology that has been digital transformation in
the businesses. In order to exploit the digital revolution benefits industries and different business
sectors progressively adopting the changes with the technology. Designer lies to the technology
is one of the powerful factor that keeps on changing and posting the productivity all over the
global industries that seemed as excellent factor in improving and enhancing the global economy
(Grima, Dalli Gonzi, and Thalassinos, 2020). Economics it is analysed that white acceptance of
the technologies key driver for the economic growth of the world. Technological progress is
allowing the businesses to make their production of goods and services more efficient increasing
the prosperity.
All the factors that have impact on the global economy also create an influence on the
growth in the international trade. International trade is highly influenced by the global headlines.
With the innovative technology in the international trade the process of trade has become more
inclusive and cost efficient. As the technology disruption are not new for the international trade
system. For example the steam power revolution has linked the world in such manner it has
never been seen before. Currently in the world of globalisation and digitalization the OCR
(Optical character recognition) is one of the technology that read the container numbers, QR
codes, trace shipments and the trade documents are digitalized which has enhanced the reliability
and effectivity of the international trade. This example of the technology factors implies that this
has positive influence on the international trade. Population is the crucial factor as with the
growing population the rate of under employment and unemployment is higher (Xu and et. al.,
2020). But this can impact international trade as with international trade new job opportunities
are created that is good for the economy and also prosperity of international trade is increased.
The population and international trade has a relationship of growth. More population means
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more consumers, more demand of good and service which boost the international trade. Thus,
therefore population always influence the international trade in good manner. The natural
resources extract 20% of the international trade and also they are dominant factor for the export
and import of many countries. Natural resources are the key drivers for the international trade as
the natural resources of one country are export to multiple countries in large scale in order to
provide access of each resource to every citizen on planet. With the exchange of natural
resources between the countries the new innovative good and services are developed which are
useful for the international trading. The technology has also eased the international trade as with
technology exchanging goods and items are fast and easy and also labour can commute one place
to another in easy manner through airline services (Gowa, 2020). The infrastructure is also the
most influencing factor for the international trade as through this the international business gain
some advantage to start their business in countries that has efficient infrastructure. It is the nature
of infrastructure that it influence the international trade in positive manner as they are good for
the growth and prosperity of the international trade.
There are many business who have expanded their business in different countries and
they are hugely impacted with the existence of environment which persist there. Global business
environment can be defined as that environment which is the interaction of local and
international environment that makes an influence on the working of the business. Marks &
Spencer is a global business which is there in many countries and is doing great in every country.
But with this, they have to make their planning according to the local and international
environment to achieve competitive advantage in the market (Adao and et. al., 2020). There are
different ways by which global business environment creates an influence on the growth and
development of business-
Competition- With the expansion of business in international markets it has been seen that the
competition in market have also been increased. This means that when any new company will
come or enter in new market in different country then the competition percentage will rise. The
competition can be on the basis of technology, uniqueness of products, cost and other things.
Company like Marks & Spencer which have developed their business in many countries have
made the analysis of the environment which prevails while making expansion and on that basis
only they makes their planning. This has helped them to grow in the market. Technological
factors- The rise in technology have taken place where the companies are using different and
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unique technology to produce their products or to provide services to people. With the entry of
business in different country will take place then at that time they will also make the analysis that
what technology is being used by different business and how they are using which will be
according to the global business environment. Marks & Spencer also uses that technology which
is there in the market of different countries and on the basis of that only they develop the
products (Ahn, 2020). Knowledge transfer- Information transfer is considered to be the most
important and expensive one where the companies can make there strategies for the achievement
of success in market. Every business takes the help of that information which is being given to
them so that they can use it in their planning process. Global business environment helps the
company to make the use of that information which will be useful for the company and also at
the same time will help them in gaining competitive advantage. Increase flow of capital, trade-
In the global business environment where there will be different companies and the higher level
of competition. Then in this case there will be higher flow of capital and trade in the market
because companies will be doing the trade with other companies which can be for the exchange
of raw material or for the requirement of more capital.
CONCLUSION
It is concluded from the above information that for the healthy and stable survival it is
very important to have a sound global economy. The economic development is crucial and vital
for the global level growth of the countries. The factors like population, natural resources,
technology impact the global economy to great extent and also it have some positive influence
on the international business. It is concluded that global business environment is full of
competition and allows the international business to have growth and development in order to
gain completive edge.
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References:
Books and Journals
Adao, R and et. al., 2020. International trade and earnings inequality: A new factor content
approach (No. w28263). National Bureau of Economic Research.
Ahn, J., 2020. A theory of domestic and international trade finance. Emerald Publishing Limited.
Backus, D.K., Kehoe, P.J. and Kydtand, F.E., 2021. 11 International Business Cycles: Theory
and Evidence (pp. 331-356). Princeton University Press.
Czinkota, M., Khan, Z. and Knight, G., 2021. International business and the migrant-owned
enterprise. Journal of Business Research. 122. pp.657-669.
Devereux, M.P and et. al., 2020. Taxing profit in a global economy. Oxford University Press.
Gowa, J., 2020. Allies, adversaries, and international trade. Princeton University Press.
Grima, S., Dalli Gonzi, R. and Thalassinos, E., 2020. The impact of COVID-19 on Malta and it’s
economy and sustainable strategies.
Huseynova, S., Godjayeva, E. and Huseynova, V., 2021. The impact of СOVID-19 on the global
economy in the context of globalization. In SHS Web of Conferences (Vol. 92). EDP
Sciences.
Rojek, K., 2021. Factors affecting the international competitiveness of polish economy system in
2004-2019. Competitiveness Review: An International Business Journal.
Xu, Z and et. al., 2020. Impacts of international trade on global sustainable development. Nature
Sustainability. 3(11). pp.964-971.
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