International Trade Goods And Services - 2389 Words

Global economy is the exchange of goods and services combined into a huge global market. It is practically a world without borders, inhabited by marketing individuals as well as companies who have joined the geographical world with the intent of conducting research and development and making sales. International trade permits countries to concentrate in the resources they have. Countries benefit by producing goods and services they can provide most cheaply and by buying the goods and services other countries can provide most cheaply. International trade makes it possible for more goods to be produced and for more demands to be satisfied than if every country tries by itself to be produce everything its needs. It began as early as 4000 BC,†¦show more content†¦Globalization didn’t fully resume until the 1970s when the governments began to emphasize the benefits of trade. Today, following the advances in technology have led to the quick expansion of the global trade. (Trueman, 2016) There were three suggested factors that accelerated the economic globalization, the advancement of science and technology, the market focused on economic reforms and the contributions by many businesses worldwide. The decrease in cost due to transportation and communication were also an important part in the growth of globalization. Since the 1930s, ocean shipping costs decrease by half, airfreight also change by about an 85% and telecommunications was about 99%. Table 1 shows the reduction of transportation in the years 1930 across the ocean (Trueman, 2016) The General Agreement on Tariffs and Trade/World Trade Organization (GATT/WTO) created the framework that led participating countries to reduce their tariff and non-tariff barriers to trade. Governments shifted their economies from central planning to markets. There internal improvements allowed enterprise to adjust more quickly and exploit opportunities created by technology shifts. Multinational businesses reorganized production to take advantage of these opportunities. Labor intensive production migrated to areas with lower labor costs, later followed by other functions as skill levels increased. In 1956 the creation of containerized shipping