Introduction
As the pressures of globalization are increasing for all businesses, it is important that different marketplaces and economies should be integrated with one another. For this, it is observed that increasing number developing countries are accessing different market arenas to improve their economic growth by entering into trade relations with other countries. In this regard, this paper is written to make an important discussion about the net benefits provided by international market access to developing countries. Different benefit which a developing country can derive from entering other markets and entering into trade agreements with numerous nations is highlighted in this research.
Discussion based on Literature Review
Different countries are accessing international markets due to various net benefits offered by this activity across the globe. In true essence, accessing the international market freely or without any restriction means the exchange of capital, goods, and services among various regions and countries without much interference. As accessing the international markets through global trade forms an integral component of economic activity and growth, international market entry through global business management stands as one of the important sources of economic income for developing countries.
For rapid economic growth, the developing countries can depend upon accessing international markets for global trade activity. They can invest in diverse markets, invite foreign direct investment or have combination of both for economic prosperity. At present, the names of China and India are quite notable among those developing countries that participate actively in international markets through imports, exports and foreign investments. These nations have done so by accepting the technological advancements and turning down trade barriers. Countries like Denmark, Netherlands, Greece, France, Japan, Portugal, Italy, and Norway have demonstrated such trends in the post-World War II period.
Accessing international markets means that countries are able to import and export products as well as services without any fear of intervention by the local public authorities. Different forms of government intervention include import/export limitations or bans and tariffs. Developing countries that witness low standard of living as well as have low quantity of economic resources, can enhance their economic growth by entering into free trade agreements to access international markets. Different net benefits offered by accessing international markets are elaborated in sufficient detail in the following manner:
Increased Access to Economic and Financial Resources
When developing countries access international markets via free global trade agreements (such as foreign direct investment), they are able to gain access to a broader variety economic and financial resources. This is particularly true because developing countries own limited amount of economic, natural and financial resources that includes capital, labor, and land as well as broader investment arena (money and capital markets). When developing countries enter international markets by entering into a trade agreement with other countries, they can obtain high quality resources required in the production of consumer products and services.
Improved Standard of Living
When developing countries enter international markets to have commercial relations with other countries, the standard of living or quality of life for different economic agents of the country is improved. This is because the developing countries can now import those consumer products and services that are scarce within the national borders. Importing products may be fruitful and cheaper than producing those consumer goods and services within the economy. In addition to this, developing countries can also import machinery for stimulating industrial development.
In the same manner, if developing countries are focusing on industry development, then, they can also import knowledge, expertise and production processes needed to convert raw materials into valuable consumer products. If developing countries access international markets of their neighbor nations, they can frequently enter into import agreement with neighboring countries ensuring that a constant flow of products and services is made available for addressing local consumption.
Improvement in Foreign Relations
This is usually one of the unintended results of accessing international markets through free global trade activity. As developing countries are vulnerable to international threats, they can pursue an additional protection by strategically entering into free trade relations with developed and powerful nations. Apart from this, when developing countries enter international markets via trade agreements with other nations, they can also improve their entire local infrastructure as well as increase their military strength for enhancing their political power. This net benefit also facilitates developing nations in learning the manner in which they should run the economic infrastructure and analyze government policies for the benefit of all citizens.
Efficiency in Production Processes
Moreover, qualified personnel from developing countries may also visit other nations to increase their experience and knowledge about specific technologies and production processes about specific manufacturing and business techniques. After completing their international assignments, those individuals can bring priceless knowledge and expertise with them which is possible only if developing countries access international markets with such a perspective in mind .
Empirical Evidence about Accessing International Markets
Accessing international markets for economic prosperity is an old concept among the trade development activities of developing countries. In the 14th and 15th century, used to transport spices, and silk via the Silk Route. In the 1700s, Clippers (fast sailing ships with special crew) used to transport spices from Dutch East Indies and tea from China to numerous European nations.
As discussed earlier, accessing the international markets for trade development helps developing countries to reduce poverty and improve living standard of local citizens. The most prominent example in this regard is that of China. This country was able to grow its GDP per capita from US$43 (circa. €56.28) in 2000 to US$949,18 (circa. €856.74) in 2013.
Moreover, accessing international markets also benefits developing countries by facilitating them to participate into larger business arenas around the world. For instance, because of its strong agricultural sector, as Brazil entered the international market, It has now become the leading beef and soy exporter in the world .
When developing countries access international markets for industrial development and economic growth, they become an integral part of global production network as well as supply chain and distribution activity that expands beyond manufacturing and services. Because of increased and uninterrupted access to international markets, developing countries are able to outsource various manufacturing activities as well as services. This includes customer service and data processing to Asian or African countries.
Furthermore, it can be said that by accessing international markets, Developing countries are able to import or transfer from industrialized to less industrialized countries through technology flows, internet and the advanced telecommunications. This makes it much easier and cheaper for developing countries to enter the worldwide market for trade development. If international markets are accessed, this would give greater access for capital inflows and outflows. The most prominent example in this regard is that of Indonesia top having a net foreign direct and portfolio investment of US$23.2 billion in 2013.
Conclusion
After carefully analyzing the theoretical as well as empirical evidence on the net benefits of accessing international markets for developing countries, one can easily be convinced that such an activity helps stimulate economic growth and industrial development for the benefit all local citizens. Accessing international markets also allows developing countries to not only import and export products/services but they can also enter into trade agreements with other nations concerning knowledge, expertise and production processes.
Developing countries can also access latest technological developments that can help in stimulating industrial growth by accessing international markets. If the cost of producing consumer goods is high, the developing countries can also import goods from other nations. For competing with world class producers and deal with international threats, developing countries can depend on accessing international markets for improving political relations as well. The examples of China, India and Indonesia are quite notable in this regard. In addition to this, when developing countries access other markets for growth, their businesses can also able to gain access to broader financial markets for raising capital necessary for financing working capital operations.
Works Cited
EMI. The Positive Effects of International Trade on Emerging Countries. 4 June 2015. 17 April 2016 <http://europeanmovement.eu/news/the-positive-effects-of-international-trade-on-emerging-countries/>.
EW. Developing Nations in International Trade - List of Developing Countries in International Trade. 29 June 2010. 17 April 2016 <http://www.economywatch.com/international-trade/developing-nations.html>.
