Effect of globalization on international trade

ModulTrade
Jan 19, 2018 · 3 min read

This article will list up some key points which had an impact on international trade due to globalization. In addition, we think that globalization is still an ongoing process. ModulTrade helps companies to even further globalize.

Interconnectedness

Globalization has resulted in greater interconnectedness among markets around the world and increased communication and awareness of business opportunities in the far corners of the globe. More investors can access new investment opportunities and study new markets at a greater distance than before. Potential risks and profit opportunities are within easier reach thanks to improved communications technology.

Products and services previously available within one country are made available to new markets outside the country due to globalization. In addition, countries with positive relations between them are able to increasingly unify their economies through increased investment and trade.

Maintaining Competitiveness

Globalization has had the effect of increased competition. Companies are broadening their target area, expanding from local areas and home countries to the rest of the world. Suddenly, some companies are fighting strong competition from outside their home country. This forced them to source materials and outsource labor from other countries. This story of ‘sourcing and outsourcing’ turned many companies into global ones, actively seeking for production locations and partners for new ventures. Globalization has facilitated this and made the transition to global markets easier.

Technology and Efficiency

More advanced systems are needed to facilitate global trade. Globalization pushed us to create better systems to track international trade. ERP systems are one of the solutions provided to support global trade.

Enterprise resource planning (ERP) is a process by which a company (often a manufacturer) manages and integrates the important parts of its business. An ERP management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance and human resources.

This technological innovation in global trade has enabled a more efficient environment. Technology empowers efficiency in global trade and reduces cost and time. In addition, production processes became more efficient due to globalization as companies want to maintain their competitive advantage.

However, we still find a gap between globalization and blockchain. Blockchain could help companies become even more ‘global’. It helps companies to save time and money, storing data tamper-proof and improving communication.

Companies could use smart contracts in which they can define their business rules. These smart contracts can be used when trading with other companies, creating an environment of trust. ModulTrade provides such a platform where companies can trade safely using smart contracts acting as an escrow, including all business criteria.

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Sources:

(1) https://www.avekon.org/papers/1374.pdf

(2) What is an ERP: https://www.investopedia.com/terms/e/erp.asp

(3) https://www.investopedia.com/ask/answers/022615/what-effect-has-globalization-had-international-investments.asp
(4) http://www.globalization101.org/trade-introduction/

(5) The impact of globalisation and increased trade liberalisation on European regions: http://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/impact_liberalisation.pdf

ModulTrade

Written by

Democratizing Global trade with Blockchain technology. Chat with us on Telegram https://t.me/ModulTradeIO. Website https://modultrade.com/.

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