International Trade: New Elements Theory
Introduction
International trade is one of the defining characteristics of globalisation, making countries more interconnected across geography and economies. International trade provides opportunities for increased wealth and economic development, enabling countries to capitalise on competitive advantages while diversifying investments across borders. This paper will analyse the new elements theory in international trade, introducing how international trade has evolved since the dawn of economic liberalisation. These developments will be studied from two main perspectives: the global innovation-led economy and cross-country trade relations.
Global innovation-led economy
The development of information and communication technology (ICT) has enabled a new element to emerge in international trade. Digital technologies increase global access to information and connect countries in unprecedented ways. It has also created platforms for businesses to access new markets and new consumers, promoting greater interconnectivity among countries. This facilitates increased cross-border investment and capital flows, allowing businesses to export and import goods and services with ease.
The integration of digital technologies with traditional production systems has also revolutionised production processes, geared towards global markets. This has given rise to new opportunities for businesses to produce better and more profitable goods and services. This in turn has provided a platform for growth and innovation in international trade. The globalisation of markets has also resulted in competition between businesses as they attempt to gain advantage in global markets.
Cross-country trade relations
The relationships between countries have shifted significantly in the digital age. Traditional approaches to international trade have an element of protectionism, with countries aiming to protect domestic markets from foreign competition. The new element in international trade has seen a shift away from this traditional protectionism towards open markets, where countries cooperate to increase trade capabilities and investment opportunities.
Cross-country partnerships, such as the Transatlantic Trade and Investment Partnership (TTIP), are becoming increasingly popular and provide a platform for countries to deepen economic relations. The TTIP is an agreement between the US and the EU, aiming to remove trade and investment barriers, enabling businesses to take advantage of investment and export opportunities. This opens up opportunities for businesses to access new markets and minimise global costs of trade.
Conclusion
The new elements theory in international trade has provided a platform for countries to expand their cross-border markets and partnerships and capitalise on opportunities international trade offers. Digital technologies have revolutionised global markets, creating opportunities for businesses to export and import goods and services with ease and reach new customers. These developments have led to increased competition, with businesses seeking to diversify their investments and gain advantage in global markets. In addition, cross-country partnerships, such as the TTIP, have created opportunities to strengthen economic relations between countries. Ultimately, international trade is evolving to meet the demands of a global economy, and the new elements theory presents a path to growth and development for countries.
