International Trade

International Trade

Understanding the culture in a country or region in which you are doing business is a critical skill for the international business person. Without this knowledge, a successful outcome to the business venture can be in jeopardy.

“The level of world output in any given year influences the level of international trade in that year.” By this it means that the slower the world economy is the less international trade and the higher the economy the higher the volume of trade.

"Globalization" is a term that came into popular usage in the 1980's to describe the increased movement of people, knowledge and ideas, and goods and money across national borders that has led to increased interconnectedness among the world's populations, economically, politically, socially and culturally. Although globalization is often thought of in economic terms, this process has many social and political implications as well. Many in local communities associate globalization with modernization. At the global level, globalization is thought of in terms of the challenges it poses to the role of governments in international affairs and the global economy.

There are heated debates about globalization and its positive and negative effects. While globalization is thought of by many as having the potential to make societies richer through trade and to bring knowledge and information to people around the world, there are many others who perceive globalization as contributing to the exploitation of the poor by the rich, and as a threat to traditional cultures as the process of modernization changes societies. There are some who link the negative aspects of globalization to terrorism. To put a complicated discussion in simple terms, they argue that exploitative or declining conditions contribute to the lure of informal "extremist" networks that commit criminal or terrorist acts internationally. And thanks to today's technology and integrated societies, these networks span throughout the world. It is in this sense that terrorism, too, is "globalized."

Increasingly over the past two centuries, economic activity has become more globally oriented and integrated. Some economists argue that it is no longer meaningful to think in terms of national economies; international trade has become central to most local and domestic economies around the world.

Among the major high-income economies, sometimes referred to as the Organization of Economic Cooperation and Development (OECD) countries, 60 percent of the total economic production, or GDP, is associated with international trade. Thirty-four percent comes from trade between high-income and low-and middle-income nations. The final six percent of the total world trade comes from the merchandise trade between low-and middle income nations. This shows the low purchasing power of the worlds poorest nations and indicates their general lack of economic development. Economists project that, in the U.S., more than 50 percent of the new jobs created in this decade will be directly linked to the global economy.

The World Trade Organization (WTO) is the only global international organization dealing with the rules