International trade has existed since the earliest civilizations and has seen dramatic growth in the last half of the 20th century, as it has allowed all countries of the world to exchange goods and stay interconnected.
It is an essential element in providing employment, raising living standards and enabling the global population to enjoy a greater variety of products and services, giving it the power to control the world economy with a larger share of GDP devoted to imports and exports.
International business law programmes offered in London have long served global aspirants and helped them to understand businesses on an international scale and analyse how manufactured parts are sourced from around the world.
Opting to study an executive mini LLM in international business law can help you become part of a team dedicated to improving your country’s economy and an expert at monitoring activities such as buying and selling between partnering nations or governments.
This blog will help you realise how completing an LLM in international business law degree can help you expand your business into foreign markets, giving you a clear idea of the potential advantages of international trade at the same time.
What Is International Trade?
Trading internationally is a common way in which modern businesses transform themselves into a more profitable, successful and stronger entity that can expose their brands to newer countries and open innovative markets for promoting their goods and services.
According to recent data published on the World Trade Organisation’s International Trade Statistics website, the total value of international trades reached approximately $19 trillion, right before the COVID 19 pandemic hit, with over 25% of the goods being electronics and machinery like scientific instruments and digital gadgets.
Benefits Of International Trading
International trading plays a crucial role in bestowing competitive advantage upon local companies by exposing them to foreign markets, boosting economic growth and creating more jobs.
Here’s a list of benefits that international trade agreements can promote amongst developing companies along with helping them in expanding their product selection across the globe.
- Greater variety of goods available for consumption – Implementing international trade into modern-day business can help a brand acquire natural endowments of raw materials from countries who are specialised in producing them, in return providing them with innovative and transformative products.
- Efficient allocation and better utilisation of resources - Having a good grounding of international business law will help you advise your senior management on the prevention of duplication of resources that can be harmful to the environment, thereby providing your home country with a better marketing power and producing revolutionised goods.
- Promotes production efficiency – Hiring LLM in international business law graduates can allow a company to come up with strategies to produce products at the lowest possible cost, thereby gaining a larger share in the market and increasing brand standards.
- More employment - International trade has made its mark based on the generation of more jobs to cater to the demands of foreign countries, thus fostering peace and mutual understanding, which can minimise trade fluctuations, stabilising the global economy.
Comparative Advantages Of International Trading
Besides providing a greater choice for consumers, international trade can also help entrepreneurs increase their overall revenue, leading to the accelerated prosperity of a concerned country based on multilateral trade agreements.
Following are some of the top advantages of integrating international trade elements within your current business.
- Increased revenues - This occurs due to an increase in the number of potential clients and opening up new batteries for brand growth and hiring more employees who have undergone an executive mini LLM in international business law curriculum to help the company’s management straighten their priorities and provide handpicked insides to stay ahead of other competitors.
- Longer product life span - As a student of the LLM international business law programme you will be provided with practical training on keeping your focus on the international market rather than the domestic, thereby mitigating downturns in the economy and other political or environmental risk factors.
- Easier cash flow management - Better risk management as part of international trade business comes with another hidden advantage that makes payment upfront, helping you deal with cash flow better and allowing you to expand the business overseas.
- Benefiting from currency exchange - The enhanced reputation gained by your company can help you design a final portfolio to manage currency fluctuations by leveraging export financing, opening doors for opportunities to provide specialised services in the concerned market.
If you’ve always been curious about international trading strategies, then applying for an executive mini LLM in an international business law course at the London School of Business and Finance can help you partake in the advantages of international trade.
Visit our website today to access the international trade learning resources and read more articles on business expansion.
This article was written by Deblina Dam
The term comparative advantage is most often attributed to the British economist, David Ricardo. Ricardo’s comparative advantage theory explains the benefits of international trade by pointing out the significance of relative opportunity costs in producing products for different markets. Put another way, Ricardo looked at how efficiently each country was able to produce each product and the overall benefits that this could bring to the trade market.
How does comparative advantage theory work in economics?
Comparative advantage often gets confusing when we talk about the countries that can most efficiently produce multiple products. This doesn’t mean that they have a comparative advantage in various products, however. Instead, it is essential to look at the benefits on a broader scale. Suppose there is a larger efficiency gap between two producers in relation to one product than there is with another. In that case, work should be divided up to allow the maximum overall production level, giving you the best possible cost.
The principle of comparative advantage in international trade
Comparative advantage is typically used with international trade to quantify the benefits of importing and exporting products from particular countries. Again, it does not necessarily mean that the most efficient country will always take the lead. If one country is the strongest producer of multiple products, the comparative advantage theory would suggest they should focus on the product in which they have the greatest advantage. Other countries can take over the production of other products, freeing up time and labour.
What factors influence comparative advantage?
Several different factors influence comparative advantage. Often, things like the cost of land and labour are top of the list, but it’s also vital to consider capital and the abundance of any necessary materials or other goods in a country. Productivity, speed, and efficiency also play a role – although these factors can sometimes be more difficult to quantify on a broad scale.
What is the difference between comparative advantage and absolute advantage?
Typically, absolute advantage (sometimes referred to as competitive advantage) is a simpler calculation than comparative advantage. It differs from comparative advantage in that it’s only concerned with the individual country’s ability to produce a particular good more effectively or efficiently. Whereas absolute advantage can be used to measure an organisation or country’s strength in its market, comparative advantage requires you to consider the respective benefits of choosing one product over another.
How do countries benefit from comparative advantage?
Comparative advantage can benefit all players in the market – both by making goods available at the best possible quality and the best quality price, and by allowing each country to focus its resources on the product that is going to yield the best results. As a theory, comparative advantage encourages international trade and can be used to support the import/export model.
Critics of the comparative advantage theory
Although comparative advantage theory can look confusing to students and business owners, it has been criticised by some as being too simplistic. Typically, the theory only accounts for labour costs, and treats other costs as homogenous. Critics have suggested that this is not applicable to the working world, as it does not account for real-life fluctuation and inconsistencies. In relation to international trade, it has also been said that the theory does not take into account the cultural specificity of different markets around the world, with regard to preferences and income brackets.
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