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Role of Government in International Trade, the Various Levels of Economic Integration and the Impact on International Marketing

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Explain the role of government in international trade, the various levels of economic integration and the impact on international marketing.

According to the business dictionary, International trading is the exchange of goods or services along international borders that allows for greater competition and more competitive pricing. The governments' role on international trade includes restrictions that are placed on businesses, the licensing and other permissions requirements, regulations, formalities, and taxes, all of which have a direct impact on doing business. In international business, the government effects business viability. For instance, international business transactions face more taxes than domestic businesses; they also have quantitative restrictions and licenses'. Governments also impact international businesses by establishing importing and exporting policies. There are other aspects in which governments play an important role in international business like infrastructure, law and order and minimizing risks.

Economic integration has been one of the main economic developments affecting world markets since World War II. Economic integration refers to trade unification between different states by the partial or full abolishing of customs tariffs on trade taking place with the borders of each state. The intent is to lower prices for consumers and distributors. There are five levels of economic integration, free trade area, customs union, common market, economic union and political union. Free trade area is the least restraining and liberated form of economic integration, which eliminates barriers among trading countries. Free trade is typically formed for certain classes of goods and services and doesn't allow discriminatory taxes, quotas, tariffs or other barriers and each member country is free to set their own policies towards non-members. Customs union dismantles barriers to trade goods and services among members and establishes a common trade policy with respect to non members. A principle feature of the customs union is a common external tariff on goods imported from outside. The common market amounts to a customs union and covers the exchange of goods and services, prohibition of duties in exports and imports between members and the adoption of a common external tariff with respect to non members. Common market enhances the productivity of members regardless of whether or not the country will benefit. The common markets' principle features are labor and capital free to move and no restriction on migration. Economic union requires members to surrender a large measure of their national sovereignty to super national authorities in community wide institutions such as the European Parliament. This union also allows members to standardize monetary policies, taxation, and government spending. Lastly, there is a political union which serves as the court of justice and interprets the European Union law. (Czinkota & Ronkainen, 2010)

Describe the economic and cultural elements of the international marketing environment and explain how these factors affect marketing operations.

The major elements of culture are material culture, language, aesthetics, education, religion, attitudes, manners and customs, values and social institutions. Language aids in information gathering and evaluation efforts. It also provides access to local society and provides more than the ability to communicate by extending to being able to interpret context. Religion provides the basis for trans-cultural similarities under shared beliefs and behavior and defines the ideals for life, which are reflected in values and attitudes of society and individuals. Manners and customs are important in interpretation, especially in busi8ness negotiations so that the wrong conclusion is not drawn based on cultural differences. In order to effectively negotiate abroad, all communication needs to be read correctly and analyzed so that there is a sufficient understanding of the material based on the different ways of thinking, there also needs to be sufficient knowledge and appreciation o the host country, history, culture and government as well as sufficient



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