Globalization and international trade are linked, as globalization has made cross-border trade easier by removing restrictions and improving communication. It has also led to the integration of cultures and outsourcing to countries with lower wages, resulting in cheaper products.
International trade and globalization are intertwined because international trade is a consequence of globalization. Globalization refers to the increasingly borderless trade that occurs between countries and territories. This type of trade is facilitated by the removal or easing of restrictions in the form of tariffs and other things like import quotas. Globalization serves to exploit the possibilities and opportunities available through the cooperation of different nations.
A relationship between international trade and globalization is that the ease of transportation across international borders facilitated by globalization makes international trade easier. For example, globalization has made it easy for people to travel from one part of the world to another in search of business contacts and in order to sell or buy goods and services. A businessman in China may need to meet someone in Argentina to inspect some goods, sign a contract and make arrangements for the shipment of goods from Argentina to China. Thanks to globalization, all this can be done in a matter of days.
Another relationship between globalization and international trade can be seen from the ease of cross-border communication. International communication is now much easier due to the improvement of technology and the influence of globalization. Ease of communication facilitates international trade by making it much easier for business people to communicate with each other through the use of communication tools such as the Internet, telephones and letters. Thus, a company in Australia can fax an order to a company in Japan for a number of copiers for its headquarters. They could also communicate by email, telephone or by sending letters by courier.
Globalization has led to the growing integration of cultures where other countries openly embrace some aspects of other countries’ cultures. This opens up opportunities for other companies in different countries by opening up new markets that would not have been possible without the effects of globalisation. For example, a company in the United States might open outlets of its fast food chain in Asia as aspects of fast food culture become more accepted in that part of the world. This is a link between international trade and globalization.
Another example of international trade and globalization can be seen in the effect of outsourcing. Outsourcing occurs when a company recruits employees from other countries to work for them. This may be for a number of reasons, including a desire by society to take advantage of cheaper international wages which can be less than half the minimum wage in the respective country. The same concept applies to building manufacturing plants in countries with low-wage labor as they save money and increase profit margins by using fewer paying workers. This, however, can lead to cheaper products.
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