Discussion Thread: External Environments/Risk/Global Trade and Investment
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Key Term and Why You are Interested in It
As many of us know, once a business reaches certain levels of success. There is a desire
to achieve even more levels of success, which generally means expanding beyond the original
foundations of the business. Depending on what type of goods/services a company may offer and
where supplies can be obtained, being able to achieve various levels of success may prove quite
a challenge. As someone who used to own a Lawn Care business, starting from the beginning can
be difficult, especially without the proper knowledge or the proper tools to help jump start a
business. That is why knowing where certain supplies can be obtained is vital and knowing who
can offer certain supplies is crucial in a continuously changing world. While I do understand the
most basics of trading, I want my understanding diving further into the concept of international
trading.
Explanation of the Key Term
The meaning of trade is simply the exchange of goods and services between two parties.
When it comes to international trading, it is the exchange of goods and services between two
countries. While the concept sounds simple, it is quite difficult to achieve. For example, each
country has their own type of currency, which means the value of money, as well as laws, is
different for every country. The buyer party must be able to pay with another country’s type of
currency and record the conversion when acquiring the products. Another example of an
achievement that is difficult to maintain is trust between two countries.
According to author Satterlee, “international trading is very important to a nation because it
generates business and government revenue and promotes varying levels of trust between trading
partners. These levels of trust can have both positive and negative outcomes.” (Satterlee, 2023) If
Discussion Thread: External Environments/Risk/Global Trade and Investment
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the two parties don’t maintain and respect their county’s laws, then the trust would be difficult to
keep and could potentially result in refusal for a profitable trade.
Major Article Summary
The article “International Trade and Coordination: Tracing Border Effects” is about
international borders affecting the flow of trade, whether it is on an internal level or an
international level between two countries. It explains in detail how “international and internal
borders are institutions that coordinate the expectations and behavior of economic actors. Both
types of borders delimit different administrative and legal domains” (Carter and Goemans,
2018). The purpose is to examine new administrative and legal procedures for the new
institutionalize border procedures to increase international trading between two countries. This is
done by creating an understanding of how the costs can be mitigated and shape the way
commerce is conducted. Also, more factors are considered when considering the costs for the
new procedures. An example of such possible costs includes “ongoing military conflict, alliance
ties, and shared regime type” (Carter and Goemans, 2018). The costs for ongoing change are
continuous and “the size of trade costs matters for trade negotiations and for empirical research
on international trade.” (Sourdin and Pomfret, 2012) Exploring those changes and the costs to
maintain/resolve possible benefits or consequences will prove to be invaluable to keep good
relations with other countries, especially when there is a clear understanding the institutionalize
border procedures for all parties involved in the internal and international trading system.
Discussion
How does the Primary Article Relate to the Key Term?
The primary article dives deep into international borders and the possibility of new
proposed institutionalized border procedures. With it comes the possible costs of such procedures
Discussion Thread: External Environments/Risk/Global Trade and Investment
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and how trade is affected. How it relates to international trading is that the success of the concept
relies heavily on the cooperation and trust needed between the two countries in following the
procedures. “Trust is more likely to the extent that people have relatively accurate information
about each other and can therefore more easily identify individuals for whom honesty is an
operational value” (Leff, Behr, Frieden, and Grossman, 2021). Without that trust and
cooperation, it creates an air of uncertainty for those involved and an opportunity for creating a
profitable revenue would be lost.
How does the Primary Article Relate to the Other Four Articles
In the other articles researched, it dives deeper into other aspects of international trading.
More specifically, how the costs in international trading were measured, how developing trust is
important for building economies in different countries, understanding the successful drivers in
international business, and seeing the international uncertainty competitiveness in trading
between different countries. In the article “Measuring International Trade Costs,” data has been
collected by using “the gap between cost-insurance-freight (cif) and free-on-board (fob) values
of traded goods.” (Sourdin and Pomfret, 20212) This data is generally collected with the current
border procedures in international trading. In the article “Trust and Envy: the Political Economy
of Business Groups in Developing Countries,” it discusses how trust is built to build economies.
More specifically, trust between Africa, Asia, and Latin America was a little easier to developed
because these countries “same communal, ethnic, or tribal group” (Leff, Behr, Frieden, and
Grossman, 2021). That isn’t said that there weren’t struggles to be had; but a common ground
was found between the countries. The same must be found when international trading is
involved. Without that mutual respect, international trading becomes increasingly harder to
conduct. In the article “Drivers of successful international business strategy: Insights from the
Discussion Thread: External Environments/Risk/Global Trade and Investment
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evolution of a trading company,” research was conducted on trading companies and what
strategy was used in international business. The research suggests that “the use of qualitative
methods, owing to the possibility of combining techniques for describing, coding, translating and
interpreting that permit understanding on a basis other than frequency” (Thome and Medeiros,
2016). This strategy generally involves about the convergence of methods and currencies for
successful international trading. This generally involves understanding both countries,
understanding each other’s customs and currencies. Without that understanding, international
trading becomes ineffective when doesn’t know about the other. In the last article “A
Comparison of the International Competitiveness of Forest Products in Top Exporting Countries
Using the Deviation Maximization Method with Increasing Uncertainty in Trading,” another
study is conducted to examine the extent of the competition between other companies in
international trading. “So far, there is no well-established indicator system to quantify the
international competitiveness of forest products in the context of increased uncertainty in the
trade environment” (Jiang and Dai, 2023). In the interest of this study, Market Sustainability,
Market Breadth, and Market Stability are created through competitiveness and through the
Deviation Maximization Method to understand the uncertainty that is created through the trade
environment. The collection of data is long, but it has shown where some countries could
improve international trading when it comes to forest products. How this relates to the primary
article is that new methods are always being sought to improve the standards. Some are effective
while others are not; but successful change and implementation takes time.
Discussion Thread: External Environments/Risk/Global Trade and Investment
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References
Thomé, K. M., & Medeiros, J. J. (2016, January 18). Drivers of successful international business
strategy: Insights from the evolution of a trading company. International Journal of Emerg-
ing Markets. https://www.emerald.com/insight/content/doi/10.1108/ijoem-09-2012-0120/
full/html
Pomfret, P., & Sourdin, R. (2012, February 27). Measuring International Trade Costs. Wiley
Online Library. https://doi.org/10.1111/j.1467-9701.2011.01421.x
Jiang, B., & Dai, Y. (2023). A Comparison of the International Competitiveness of Forest Prod-
ucts in Top Exporting Countries Using the Deviation Maximization Method with Increas-
ing Uncertainty in Trading. Proquest. https://www.proquest.com/docview/2806541911?pq-
origsite=summon&sourcetype=Scholarly%20Journals
Goemans, H. E., & Carter, D. B. (2018, January). International Trade and Coordination: Trac-
ing Border Effects. Proquest. https://www.proquest.com/docview/1980726270?pq-
origsite=summon&accountid=12085&sourcetype=Scholarly%20Journals
Grossman, S., Frieden, J., Behr, R., & Leff, N. (2021, September). Trust and Envy: the Political
Economy of Business Groups in Developing Countries. Proquest. https://www.proquest.-
com/docview/2575159247?accountid=12085&pq-origsite=summon&sourcetype=Schol-
arly%20Journals
Discussion Thread: External Environments/Risk/Global Trade and Investment
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Satterlee, B. C. (2023). Political and Legal Environment. McGraw Reader. https://prod.reader-
ui.prod.mheducation.com/epub/be187cd90aaa05f1aa20cf9dc0ac44ca/data-uuid-
d2fc554e42ee4c9db06463ce1106c320
Montoya, L. G., Guo, B., Newbery, D., Dodds, P. E., Lipman, G., & Gissey, G. C. (2020, May
22). Measuring inefficiency in international electricity trading. Science Direct. https://
www.sciencedirect.com/science/article/pii/S0301421520302664
Chu, H., & Cheng, C. (2019, November 11). International emissions trading in a political econ-
omy. Wiley Online Library. https://doi.org/10.1111/roie.12458
Strange, G. (2020, February 3). Debating Free International Trade. Wiley Online Library.
https://doi.org/10.1111/ajes.12310
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