A1 International Business

International trade is the buying and selling of goods and services between different countries. When a product is bought from another country, it is referred to as an import. When a product is sold to a customer in another country, it is called an export.

Benefits of International Trade

A wider variety of goods and services are available to consumers as goods are imported from different countries. This can improve standards of living and make the market more competitive.

There could be an increased standards of living due to the wider range of goods and services. Increased competition can make the market more competitive which may lead to lower prices. This in turn makes goods and services more affordable.

Technology transfer is the spread of knowledge of technology between organisations. Investment into research and development into technology can benefit more firms than the one that made the investment. International trade has meant that knowledge and improvements to technology spread quickly. This has been of benefit to businesses in less developed economies who may have less money to invest in R&D.

Employment opportunities are created in areas where international businesses locate their operations in the supply chain which in turn generates spending in the economy and can lead to economic growth.

Cooperation between nations through trading resources can create goodwill and improve relationships. Importing goods from another country boosts their economy and exporting goods to another country can improve the standards of living in that country.

International specialisation can occur when a firm has operations in multiple countries due to the opportunity to use division of labour. For example, they may have a factory in one country, research and development in another and sales in another. This allows them to make the most of the skills of labour in each country which in turn allows that labour to specialise.

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A1 Globalisation