Countries are interdependent, this means they count on the other person to aid their economies. They need other countries to buy their exports to obtain money to buy resources that are not stated in their country. And yes it is so that countries can specialize in producing a good or service and know that the products that they do not have can be imported from other countries that specialize in that good.
Countries have a whole lot of expenditures (health services, military, pay etc) and taxes rarely cover all of these, so they need to borrow to offset the deficit.
Also when a country needs to prosper, they want money to improve life conditions of the inhabitants. When the life conditions improve, the citizen can pay the money back a virtuous group. (Anon. (n. d))
International trade can be an essential feature of the UK market, it is essential for the UK so that it can support its economics talents and progress in an more and more competitive global market.
In this article I shall look at the significance of international trade. First I will identify the way the UK economy operates on an international level. Second, I will consider the expenses and benefits associated with international trade, and how the UK economy has been influenced by international trade and the consequences of an extremely globalised current economic climate.
As we will see, international trade has been vital for the united kingdom economy to build up throughout the colonial period, and the post conflict period. The problem of globalization has created clear economic doubt and the apparent understanding that the UK economy is vunerable to effects that are plainly outside its realm of impact. (Anon. (2007))
There are a lot of things that are important about international trade, financial integration and global marketplaces. Without international trade, businesses wouldn't be as profitable and economies would go through.
Below are some reasons as to why such things as international trade are so important to UK businesses.
Broadens Horizons and Markets
If a business based in the united kingdom was to only sell and operate their products domestically, never marketing or moving their product to consumers in other countries, the united states would completely limit its potential. They may always gain a steady trade from UK consumers, nevertheless they wouldn't be able to grow as much as if the business exchanged with eight other countries, for example.
This is the reason why international trade is so important for companies and the current economic climate - it does increase traffic, customer characters and sales.
By trading in other countries, the company also starts itself up to lower production costs. For instance, a TV supplier in Australia may discover that its product could be created for greatly less in a stock in Greece.
This not only will save you the company money, but it can help the consumer as the TV can be sold for less. Furthermore, Greece's market is helped because of the TV company paying the manufacturing plant to build its product.
If it wasn't for other countries, we wouldn't be able to get our practical many of the materials we need to make products we use every day - especially in the meals industry. Colder countries, including the UK, rely on warmer countries for fruits such as bananas and mangoes, and the ones hotter countries count on places such as the UK for such items as potatoes.
Without international trade or monetary integration of food trade, all countries would have a very scarce choice. ( Anon. (n. d). )
Trading blocs throughout the world
UK account of EU
Enlargement of EU
Importance of global market
1. Trading blocs across the world: A trading bloc is an intergovernmental contract or a trade pact in which the countries who've agreed to get involved either reduce the trade barriers or completely eliminate them to truly have a easy trade. UK is a member of the European Union (European union) which is called a free-trade relationship where countries who are an integral part of it, discuss the arrangement with the European union.
2. UK membership of EU: UK joined europe in 1992, and became one of the 12 founding people, after previously joining the Western european Economic Community (EEC) in 1976. It is among the most most powerful trading bloc on earth and has a GDP exceeding that of the United States. Additionally it is the most significant explorer and the second largest importer. In 2008, it's estimated that the GDP of the European union was accounted for over 22 % in terms of the world's financial output.
3. Enlargement of EU: Enhancement of European union is also called the procedure of expanding europe by inviting new states. EU started out with just six states and even more famously known as the "Inner Six" in 1952. Since then, it is continuing to grow in stature and widened to over 27 users with most recently being Bulgaria and Romania. For 2013, Croatia is slated to be appointed.
4. Importance of Global Market: Importance of global market and maintain is very significant to UK because for over ages, UK has been trading with USA, Germany, holland, France and the Republic of Ireland. Across the majority of the sectors analyzed, the 11 key marketplaces accounted for at least a third of total UK exports. In this group of marketplaces and sectors, between 2002 and 2007, the united kingdom had varied its exports away from its historically more important trading partners including the USA, Germany and Japan towards the eight emerging markets.
5. Emerging Market segments: Among the high growth markets there are the ones that are at a more advanced level in their development, such as Korea, Singapore, Taiwan and Turkey, and those that are growing faster from less level of GDP per capita, such as China, India, Indonesia and Vietnam. Middle Eastern high growth markets (Qatar, Saudi Arabia and the UAE) already have relatively high degrees of GDP per capita. There are also several countries rising as a fresh wave of high progress market segments; Bangladesh, Egypt, Nigeria and the Philippines are anticipated to record average expansion rates above 7 % per annum between now and 2050, creating more long-term opportunities.
Here will be the two regulations of European Union which have impacted on UK business organizations:
1. Employment Policy: Government performs a major part in looking to stimulate employment. For instance, the present authorities is keen to encourage business efficiency so that the UK companies are competitive in international market segments and therefore create jobs. For those who have difficulty finding work, the federal government has created what's referred to as "The New Deal", offering people the opportunity of expanding training and experience on administration funded and sponsored employment programmers.
2. Inflation Insurance plan: The government seeks to ensure that there are no sudden standard goes up in prices. They do that through the Monetary Coverage Committee (MPC) of the Bank of England which sets interest rates. Interest rates are put up if there is a danger of people borrowing and spending too much, thus pressing prices up. Bringing up interest rates causes it to become more costly for businesses to borrow funds. It also helps it be more costly for consumers to borrow money. They then have to invest less, which helps to force down the prices.
What we've come to study from this assignment is the fact what is the importance of trade nowadays. The significance of the global factors that condition national business activities. Also the impact of EU on the world and exactly how much importance it keeps in maintaining order among these countries. Overall, this assignment has helped me know how important the role of stakeholders are and has better my writing and research skills.