Answer To: HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION HI5016 International Trade and Enterprise Research...
Soumi answered on Apr 23 2021
HI5016: INTERNATIONAL TRADE AND ENTERPRISE
HI5016: INTERNATIONAL TRADE AND ENTERPRISE
[SELECTED TOPIC: 3. SMALL COUNTRIES WITH LESS POPULATION AND GDP HAVE BEEN BENEFITED WITH TRADE]
Introduction
With the advent of globalisation, business is not limited to physical boundaries of a nation.
This assignment deals with the benefits arising out of trade to three small countries, which are Bangladesh, Vietnam and Philippines.
In the year 1960, trade as a percentage of world Gross Domestic Product (GDP) was only 24.126%.
However, in the year 2017, trade comprised 71.701% of the world GDP (The World Bank Group, 2019).
Any type of trade benefits both the parties to the transaction. The seller is able to earn a profit and the buyer is able to avail the goods or services. Few countries across the globe are highly involved in trading activities across the globe. However, few countries like North Korea seem to have less involvement in global trade. Japan, United States of America, Germany and Russia are the countries that have a high volume of export and import. However, smaller countries like Nepal, Bangladesh, Maldives, and Philippines have less volume of trade.
This indicates the contribution of trade towards the increase In GDP of the world. Trade plays an integral role in the GDP of the country. Higher the trading volumes, higher are the GDP of the country. The internal trade of a country is limited to the internal demand of the country. On the other hand, when a country is involved in exports and imports it tries to satisfy the needs of other countries by exporting and meet its own requirement through import.
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Benefits of Trade
A country involved in global trade has no pressure of producing all the products on its own
There are certain products, the production of which is not a feasible option for a nation. Therefore, the nation can focus on producing the goods, which are its core competencies.
Due to increase the trade, the economic growth of the countries also increases
A country will never try to involve in war with the countries it has good trade relations
Trade seems to benefit smaller countries as such countries have lack of resources
There are multiple benefits of trade. The most prominent one is that a country involved in global trade has no pressure of producing all the products on its own. A country can own a limited variety of resources. As viewed by Gibson (2016), it is not possible for any country to own all the types of resources to meet all the internal demands. There are certain types of products, which are the core competencies of those areas. This means that the company at a competitive price can produce such product or services. On the other hand, there are certain products, the production of which is not a feasible option for a nation. Therefore, the nation can focus on producing the goods, which are its core competencies.
Excess production of such goods will enable it to export the same to other nation, which will help it in earning profits. Such profits can be used to procure the goods whose production is not feasible. Therefore, trade helps in optimum utilisation of the resources by a nation. The nation can produce excess quantity of goods or services it is good. The excess can be traded for profits and the profits can be used for procuring other goods. If there is no trade, the optimum utilisation of scarce resources is not possible.
Due to increase the trade, the economic growth of the countries also increases. As the volume of transactions increase, there is larger involvement of capital, which increases the money supply in the economy. Increase in trade also enables an economy to increase its foreign exchange reserves, which can be used to meet the import obligations during emergencies. As stated by Chey and Helleiner (2018), as the volume of trade, larger numbers of people are required to manage the same, which leads to generation of employment opportunities in the country. Trade also promotes peace and cooperation among nations. The larger the volume of trade with other nation, the more they can benefit from each other and help each other grow.
Therefore, from the economic point of view, a country will never try to involve in war with the countries it has good trade relations. As indicated by McKinney (2016), trade also promotes peace and prosperity. Countries can procure the much-needed resources for economic development. Such resources includes basic resources like medicines for improving health, machines for industrial and infrastructural development and other goods and services. Large economies have access to large quantum of resources due to which they can meet their internal demand up to a large extent.
However, the small economies lack resources, which pose an issue for such countries to meet all types of needs. Therefore, trade seems to benefit smaller countries as such countries have lack of resources. Hence, involvement in trade enables such small countries to procure resources to meet the basic needs as well as demands of the citizens.
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Trade Summary of Bangladesh
In 2015, the export of Bangladesh was $31734 million in comparison to the import bill of $48059 million in the same year.
The country exported a total of 1728 products and imported around 4208 products.
It has 188 exporting partners and 202 importing partners
The GDP of Bangladesh in the year 1960 was $4.275 billion and the same figure in 2017 is $249.724 billion. The country exported almost 58.47% of its total exports to Europe and Central Asia (World Integrated Trade Solution, 2019). South America is also a large market for Bangladesh with 22.70% of total imports in the year 2015. The same figure for United States and Germany are 19.35% and 14.73%. The country exports variety of garments to foreign countries. On the other hand, it imports petroleum, oils, cotton, palm oil, Durum Wheat, Crude soya-bean oil and other products from other countries. Raw materials account for 2.60% of total export and 12.67% of total imports. The intermediate goods account for 3.07% of the total imports and 46.91% of the total imports. On the other hand, consumer goods account for 93.41% of the total imports and 23.16% of the total imports. Finally, the capital goods account for 0.92% of the exports and 17.26% of the total imports (World Integrated Trade Solution, 2019).
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Trade Summary of Vietnam
In the year 2016, the total exports of Vietnam were $176581 million in comparison to the import of $174978 million.
The export of the country is slightly higher than the total goods imported by the country.
Around 3783...