Economic Analysis: The International Trade Market

International trade plays an historically large role in the growth and prosperity of countries around the globe. Similar to the benefits that open trade within a country brings to that country’s respective economy, trade on the international front improves the global market economy significantly. , promotes the transfer and utilization of new technology and allows countries, customers, and businesses alike to access to the world’s best products. Trade in the international market brings about the capacity for innovation, high productivity and rising incomes and economic standings for each country that chooses to engage in it. However, certain strategies, regulations and methods must be employed within the international market to ensure success and smooth operations in each respective country that becomes involved in world trade.

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Governmental Role in International Trade

The government plays a very specific role in the field of international trade and can be found in different levels of economic integration within the markets which impacts the international market in a very viable way. In beginning international trade, a foreign country with an appropriate demand profile is identified, institutional barriers, trade barriers, administrative regulations, commercial law enforcement standards are identified and adhered to by the government and trade is able to commence between nations (Winter-Nelson, 2007, p. 60).

Despite the notion that economically speaking, government should play no role in the market, the fact remains that these countries do play a large role in the market, especially on the regulatory level. Countries’ governments oversee the operations of international trade through the passage of laws that deal with the internal structure of trade operations within its country such as setting trade regulations, assessing unfair trade laws pertaining to international trade specifically and the like; the government also has the capacity to deal with international dispute settlement procedures within its own country’s court system (Lowenfield, 2001, p. 410). In dealing with the legal and structural framework of a respective country’s international trade dealings, a government is able to set in place regulations that ensure the efficiency of its international trade market as well as the safety of its own citizens who will evidently become customers in setting safety standards and regulations that oversee the quality of products that are brought into the country from foreign markets.

Economic and Cultural Elements of the International Marketing Environment

Certain economic and cultural events within the international marketing environment help outsiders to the field understand how such factors are relevant to marketing operations in terms of the effect each has on these operations respectively. Because the world on international marketing is comprised of countries with significantly different cultural, economic and social backgrounds, the inner-workings of the market are extremely complicated. This complexity is further deepened by the fact that all countries, whether they like it or not, are economically related to each other in one way or another (Rauch and Trinadade, 2009, p. 810). For example, an increase in the price of oil in one Middle Eastern country will directly affect the trade relationships that countries seeking this oil have with the Middle Eastern country. The increase in price creates an extensive and complicated chain of events that will no doubt effect each country that deals with the holding country within the international market. Such instances also cause strains on the social relationships between countries who may view such happenings from different cultural standpoints. In understanding this facet of international trade, one can better understand the implementation of internationally-recognized free trade agreements that allow countries with differing cultures and economic systems to interact with one another on a larger scale in hopes of benefiting each area involved. Such the North American Free Trade Agreement (NAFTA) between culturally and economically-diverse Canada, the United States and Mexico and the South Asian Free Trade Agreement (SAFTA) between Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka, both of which has escalated the economies of the countries involved.

Political and Financial Risks of International Marketing

Within the realm of international marketing, major political and financial risks often rise to the forefront. Such risks are similar to those that are taken on by traders in domestic markets, but in viewing the risks on an international playing field these risks become far more apparent with the capacity to have significant financial impact should something go wrong. For instance, countries engaging in trade in the foreign market may see such financial risks as buyer insolvency (purchaser cannot pay for the goods set up for exchange), non-acceptance (buyer rejects goods as different from the agreed upon specifications), and credit risks (allowing the buyer to take possession of the goods prior to payment) (Dutta, 2010, p. 320). These risks may cause significant damage to the involved countries trade agreements or good standing, which may prove detrimental to further international market dealings.

Additionally, political risks within the international market can be found in the areas of regulation (a change in the international market rules of one country may prevent a transaction), government intervention which prevents a transaction from being completed, change in political leadership that can interfere with transactions or prices, and politically-driven war, piracy, civil unrest or turmoil within a nation which can cause significant damage to current and future trade dealings and exchanges within the international market setting (Dutta, 2010, p. 323).

Marketing Planning Process, Strategy for Foreign Markets and Expansion

In international marketing, the strategic marketing planning process is key to the market running smoothly and as desired by investors and stakeholders. Further, there are specific strategies individuals and companies utilize in entering foreign markets that the aforementioned parties must take under consideration. Additionally, considerations must be made for subsequent expansions in the market pending an initial market presence.

In viewing expansion in the international market, the capacity to enter new foreign markets is done in hopes of attracting new market segments in more diversified areas. Certain channels of distribution in order to expand into new foreign markets have become available in recent years and have significantly impacted the growth of certain international companies. Take for example, like Pepsi or Coca Cola who have used their successful business models and international trade standards to breach new countries through the use of the Internet and viral marketing. Such new technology had paved the way for expansion in the international market that countries and businesses would spend years honing in past decades.

In utilizing such viral marketing strategies on the international market for expansion, companies and countries alike are able to quickly monitor success (or lack thereof) in an area to better gauge room for improvement and the areas of international dealings that may need to be adjusted in order to turn a higher profit.


In viewing some of the basis for trade within the international market, one can better understand the forces that are continuously pushing on the market and in turn, affecting it each and every day. Despite the risks that entering the international market may pose, the fact remains that trade and dealings on an international scale open up the doors for consistent and extended trade relations that will continue to benefit countries around the globe for as long as international trade exists.


Dutta, N. (2010). Foreign investment, financial development and political risks. The Journal of Developing Areas, 44.2: pp: 303-327. Retrieved from: ProQuest Database.

Lowenfield, A. (2001). The role of government in international trade: essays over three decades. The American Journal of International Law, 95.2: pp: 400-502. Retrieved from: ProQuest Database.

Rauch, J. And Trindade, V. (2009). Neckties in the tropics: a model of international trade and cultural diversity. Canadian Journal of Economics, 42.3: pp. 809-843. Retrieved from: ProQuest Database.

Winter-Nelson, A. (2007). Roles for government in international trade. Journal of Regional Analysis and Policy, 37.1: pp. 60-61. Retrieved from: ProQuest Database.

Economic Analysis