Section A: The importance of international cooperation in the global economy
International cooperation has led to the creation of free trade zones among countries. This has been achieved through liberalization of economies by eliminating barriers to trade. It has opened doors for trading activities among countries freely promoting an orderly global economy (IMF, 2009). International cooperation has promoted tourism. This is because of the peaceful coexistence among nations .Tourists feel free to visit other nations. This has promoted the economic status of countries through the foreign earnings from tourism activities. It has promoted investment activities of countries. This is because of the ability of developing countries to borrow loans from developed countries, which help them to develop their countries (IMF, 2009). This has promoted an orderly global economy.
Section B: Benefits of international links to a US company
The US based company would experience improved sales .This would be achieved through good customer relations and well built up a reputation. The free trade area would lead to mass production and fair pricing of commodities. This would make the industry have a good customer base (Bridges, 2012). It also provides room for prospects like other foreigners This leads to high local stock turnover and huge export. All these activities lead to increased earnings both from local sales and foreign revenue.
The company would benefit through rapid growth of the industry. When competition exists, industries crave for survival by struggling to meet market demand requirements. Competition triggers innovativeness (Bridges, 2012). This leads to improved product quality as well as unveiling of new products in the market. Mass production is meant to meet global demand since the borders are open for the U.S based company to trade. This results to high sales volume. Eventually, the total income earned increases and also the growth of the company.
The industry would also benefit by cutting on production costs. When the international financial links are strong, it means low interest rates on borrowing and, therefore, the industry is able to obtain loans for expansion. This would cut on the expenses of repaying the loan with huge interests and thus helping the industry minimizes costs but maximize profits (Bridges, 2012).
Section C: Absence of trading agreements and impact on the US economy
Lack of trade arrangements would lead to a lot of problems for the U.S based company. Trade protectionism closes the doors for industries to compete. Therefore, the industry fails to innovate new products (Brown & Young, 2011). Product quality would remain the same leading to exploitation of consumers since they would be paying high wages for low quality products. Most consumers would evade using their products leading to a decline in the business performance financially. This is attributed to insufficient sales leading to low turnovers.
In addition, it would lead to decline in the industry sales. When the borders are closed to foreigners, the market of industrial products is restricted within a limited geographical zone (Brown & Young, 2011). This means that labor would be reduced, and thus production would be a lump sum. The stock turnover would be less than previous levels. Since consumers would be running away from high prices, the industry would lose prospects .This would result into industrial collapse.
There would be slow economic growth. This is because most of the industries would be declining and this would lead to unemployment of many employees. The per capita income of the country would reduce. Prices of commodities would skyrocket leading to inflation. Inflation would reduce the strength of the dollar and this would affect the industry due to high prices of obtaining commodities leading to its losses (Brown & Young, 2011).
References
Bridges, G. (2012). Grounding Globalization: The Prospects and Perils of Linking Economic Processes of Globalization to Environmental Outcomes. Economic Geography, 361-386.
Brown, A., & Young, H. (2011). International Business. The Wall Street Journal , 74-79.
IMF. (2009). Globalization: Threats or Opportunity. International monetary Fund Publication, 148-155.
