International business is a topic which is extremely interesting and if you are a student who likes the subject of business, you will certainly like the topic of international business. The main concept involved in international business is that of trading. Trading is basically the exchange of good and/or services in return for money. Trading can take place between two different countries or it could also take place between two people/businessmen within the same country. Trade which takes place between two parties is known as bi-lateral trade whereas if more than two people are involved in trade, it is known as multi-lateral trade.
Many students ask the question as to what exactly international business and trade is. International trading basically takes place between countries, one being the exporter whereas the other being the importer. There are certain barriers which the importing country makes use of. The following barriers are used by a country as they do not want goods of others countries coming into their own. This increases competition.
Barriers of tariff- duties, quotas, tax
Non tariff barriers- the quantity of imports is given a fixed level
Voluntary constraints- the government of a country itself restricts any kind of foreign goods coming into their country
The above mentioned barriers are all those which a country imposes on its imports. The imports then become expensive for the local people to consume which hence reduces their demand and consumption. In return the local goods are much more preferred.
When wanting to trade in the internal market, a country needs to make use of the above mentioned trade barriers. It is mostly under-developed and developing countries which make use of these types of barriers. There are certain advantages which a country gets when making use of these barriers. Some of these are mentioned below:
A country is able to earn foreign exchange currency
The local industry is kept safe from the international products
The quantity of imported goods is reduced which increases the demand for local goods