Assignment on Business in Global Context

Question: Write about the Assignment on Business in Global Context. Answer: Introduction: International trade between two or more competing nation depends on several factors like the comparative advantage of the nations, the existing scarcity in the volume of resources, the exchange rate between the nations and the political scenario of the same. The decision of conducting trade with partner countries includes a complex combination of several factors that exists both within the trading economies and outside them. Through this part we try to find out the existing problem that the nations worldwide are facing in conducting international trade. Discussion: According to an article published by Forbes, there are four factors that affect the free trade and become both economically and politically unviable (Dorfman, 2016). One of them is this might lead to an increase in the level of inequality with the nation. One nation may gain at the cost of others. Hence it is now opposed by various political parties in several regions in order to save their economy from falling into this inequality trap. According to the theory, it has been unanimously agreed by all economists that the global economy gains from the conduct of free trade. Recently it has been observed that this theory has been receiving criticism. The critics mentioned that the benefits are dispersed whereas the negative impacts are highly concentrated in particular regions. Often it has been observed that free trade creates joblessness as the country can import goods from other nations (McArdle, 2012). In addition, each economy tries to keep its exchange rate stable so that the trade takes place smoothly. It has been observed that keeping the exchange rate low increase the level of export and thereby increases trade balance (Gilpin. 2016). But this again creates a monetary injection in the society in the forms of foreign currency and henceforth increases inflation within the economy. Therefore, the political ruler always tries to maintain a subtle balance between the exchange rate and volume of trade. It has already been stated that the international trade depends on exchange rate. The reason behind this trade getting politically contentious in 2017 is that this exchange rate depends on inflationary pressure, interest rate and psychology of the market (Mansfield, 2015). There has been major political turmoil in the global economy back in 2008 and now with the global economy faced a turmoil regarding the stability of one of the trading giants, that is U.S. With the change of political power, there has been question regarding the stability of the nation in near future. In addition, the global economy also saw the exit of Britain from the trade agreement. Brexit has an overall impact in the global trade market and it questioned the stability of international trade. Conclusion: This topic can be wrapped up by stating that the nations needs to cautiously set its system of exchange rate into a floating one to avoid harsh consequences from trade fluctuation. Political contentious cropped up as a fact that the more competitive a business becomes, the lesser opportunity the investors gets to exploit other markets. In order to protect the nation and follow on with trade, there is need to have political stability within the nation and impose mutual restriction to certain levels to save both the parties from getting exploited by the other. References Dorfman, J. (2016).Forbes Welcome.Forbes.com. Retrieved 15 April 2017, from https://www.forbes.com/sites/jeffreydorfman/2016/04/03/4-reasons-free-trade-has-become-a-contentious-political-and-economic-issue/2/#59d17abd204e Gilpin, R. (2016).The political economy of international relations. Princeton University Press. Mansfield, E. D. (2015).The Political Economy of International Trade. World Scientific Publishing Co. Pte. Ltd.. McArdle, M. (2012).4 Politically Controversial Issues Where All Economists Agree.The Atlantic. Retrieved 15 April 2017, from https://www.theatlantic.com/business/archive/2012/04/4-politically-controversial-issues-where-all-economists-agree/255600/