When two countries trade goods and services there are various hurdles have to be faced. Discuss.
The below listed are the hurdles that are faced when a country thinks of stepping into international trade
1) The existence of different currencies in countries creates a hindrance in trade, as one country’s currency cannot be used in other countries.
2) International trade involves a host of legal formalities, such as import licence and export clearance, that must be completed before international trade can begin.
3) Because of large physical differences, there exist problems in transport of goods across borders.
4) International trade can turn out to be a lengthy and time-consuming process.
5) Because of long physical distances that exist between countries, there exists a time lag between the dispatch of goods and their delivery.
6) International trade faces hindrances in the mobility of factors of production.
7) A country needs to evaluate the cost and the benefits associated with being a member country in the international groups say SAARC. Being a WTO member, there are certain lines or rules that the participating country needs to be abide by. Often adherence to such rules comes with a high cost of comprising few benefits for instance, developing nations face an acute high trade barriers when their products enter into developed countries, leading to discouragement of their products.
1) The existence of different currencies in countries creates a hindrance in trade, as one country’s currency cannot be used in other countries.
2) International trade involves a host of legal formalities, such as import licence and export clearance, that must be completed before international trade can begin.
3) Because of large physical differences, there exist problems in transport of goods across borders.
4) International trade can turn out to be a lengthy and time-consuming process.
5) Because of long physical distances that exist between countries, there exists a time lag between the dispatch of goods and their delivery.
6) International trade faces hindrances in the mobility of factors of production.
7) A country needs to evaluate the cost and the benefits associated with being a member country in the international groups say SAARC. Being a WTO member, there are certain lines or rules that the participating country needs to be abide by. Often adherence to such rules comes with a high cost of comprising few benefits for instance, developing nations face an acute high trade barriers when their products enter into developed countries, leading to discouragement of their products.