5 Major Current Trends in
Foreign Trade
1) Forced Dynamism:
2) Cooperation among Countries:
3) Liberalization of Cross-border
Movements:
4) Transfer of Technology:
5) Growth in Emerging Markets
Current
trends are towards the increasing foreign trade and interdependence of firms,
markets and countries.
Intense competition among countries,
industries, and firms on a global level is a recent development owed to the
confluence of several major trends. Among these trends are:
1) Forced Dynamism:
International trade is forced to
succumb to trends that shape the global political, cultural, and economic
environment. International trade is a complex topic, because the environment it
operates in is constantly changing. First, businesses are constantly pushing
the frontiers of economic growth, technology, culture, and politics which also
change the surrounding global society and global economic context. Secondly,
factors external to international trade (e.g., developments in science and
information technology) are constantly forcing international trade to change
how they operate.
2) Cooperation among
Countries:
Countries cooperate with each other in
thousands of ways through international organizations, treaties, and
consultations. Such cooperation generally encourages the globalization of
business by eliminating restrictions on it and by outlining frameworks that
reduce uncertainties about what companies will and will not be allowed to do.
Countries cooperate:
i)
To gain reciprocal advantages,
ii)
To attack problems they cannot solve alone, and
iii)
To deal with concerns that lie outside anyone’s territory.
Agreements
on a variety of commercially related activities, such as transportation and
trade, allow nations to gain reciprocal advantages. For example, groups of
countries have agreed to allow foreign airlines to land in and fly over their
territories, such as Canada’s and Russia’s agreements commencing in 2001 to
allow polar over flights that will save five hours between New York and Hong
Kong.
Groups of countries have also agreed
to protect the property of foreign-owned companies and to permit foreign-made
goods and services to enter their territories with fewer restrictions. In
addition, countries cooperate on problems they cannot solve alone, such as by
coordinating national economic programs (including interest rates) so that
global economic conditions are minimally disrupted, and by restricting imports
of certain products to protect endangered species.
Finally, countries set agreements on
how to commercially exploit areas outside any of their territories. These
include outer space (such as on the transmission of television programs),
non-coastal areas of oceans and seas (such as on exploitation of minerals), and
Antarctica (for example, limits on fishing within its coastal waters).
3) Liberalization of
Cross-border Movements:
Every country restricts the movement
across its borders of goods and services as well as of the resources, such as
workers and capital, to produce them. Such restrictions make international
trade cumbersome; further, because the restrictions may change at any time, the
ability to sustain international trade is always uncertain. However,
governments today impose fewer restrictions on cross-border movements than they
did a decade or two ago, allowing companies to better take advantage of
international opportunities. Governments have decreased restrictions because
they believe that:
i) So-called open economies (having
very few international restrictions) will give consumers better access to a
greater variety of goods and services at lower prices,
ii) Producers will become more
efficient by competing against foreign companies, and
iii) If they reduce their own
restrictions, other countries will do the same.
4) Transfer of
Technology:
Technology transfer is the process by
which commercial technology is disseminated. This will take the form of a
technology transfer transaction, which may or may not be a legally binding
contract, but which will involve the communication, by the transferor, of the
relevant knowledge to the recipient. It also includes non-commercial technology
transfers, such as those found in international cooperation agreements between
developed and developing states. Such agreements may relate to infrastructure
or agricultural development, or to international; cooperation in the fields of
research, education, employment or transport.
5) Growth in Emerging
Markets:
The growth of
emerging markets (e.g., India, China, Brazil, and other parts of Asia and South
America especially) has impacted international trade in every way. The emerging
markets have simultaneously increased the potential size and worth of current
major international trade while also facilitating the emergence of a whole new
generation of innovative companies.
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