It is good to know the pros and cons of international trade as it affects you, your community, and the country as it is a vital part of the local and world economy. Pros of international trade: It offers goods and services which are not easily available through domestic or local distributors. In every country there are certain plants, produce, and assets indigenous to foreign countries that we may not be able to make here but can import. The large production levels of multinational necessitate the purchase of inputs in commensurately large volumes. Bulk purchase of inputs enables major corporations to bargain for lower input costs, and they are able to obtain substantial volume discounts. The lowered input costs imply less expense and, therefore, more competitive finished products. The ability to shift production overseas is another pro enjoyed by the companies. To increase their international competitiveness, they relocate their production facilities overseas, thereby taking advantage of lower costs of labour, raw materials and other inputs and taking on incentives offered by the host country. Cons of international trade: One of the disadvantages of international trade is the risk of business as the MNCs conduct business outside the borders of their own countries; they deal with the currencies of other country which does render them vulnerable to fluctuations in exchange rates, meaning they can lose out on their money. Some of the biggest obstacles that face international trade include the language barrier, different legal systems, and cultural differences and host country regulations which all cause problems in establishing international business. Natural disasters and international conflicts may cause delays and breakdowns in supply chains. Retailers who previously bought coffee from Haiti and products from Japan are to likely to have rearranged their inventories until both countries are fully operational again.
