Disadvantages of International Trade

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  • Disadvantages of International Trade
    • Involves high transport costs
      • However, these have been reduced by the development of containerisation
    • Currency exchanges can carry costs
      • Could result in financial losses
    • Costs to firms
      • Firms must comply with other countries' legal and technical requirements
      • Firms may need to translate documents and advertising material
      • Firms will need to perform market research overseas
    • Increased globalisation
      • Rising world incomes causes rising prices
      • Leads to economic dependency on other countries
        • Can lead to instability
      • Global imbalances in balance of payment accounts
        • These balances are unsustainable and call for increased protectionism
      • Individual firms can be outcompeted by foreign firms
      • Specialisation leads to overrelaiance on certain industries in an economy


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