Factors leading to Rapid Growth in International Business


Factorsleading to Rapid Growth in International Business

Factorsleading to Rapid Growth in International Business

Thedevelopment of a “borderless” and a “shrinking” world hasimpacted on the growth of international business globally. Theborderless world is characterized by the existence of lessrestrictive international policies that have facilitated better andefficient flow of goods and services from one country to another. The“shrinking” world is characterized by an easy access to foreignmarkets due to advancements in communication and transport. All thesedevelopments have made the world a global village that has opened thegrowth of international trade. This discussion seeks to describe thefactors that have led to the rapid growth in international trade andexplore the roles played by selected institutions in global business.

Oneof the most significant factors that have led to the rapid growth ofinternational business is the development and expansion oftechnology. Technology has expanded over the years and is currentlyexpanding at a level that is facilitating international trade. Inaddition, developments in communication technology that is hallmarked by telecommunication has allowed traders from differentcountries to communicate and strengthen trade relations (Coxet al, 2013).Most importantly, the development and advancements in the internethas opened the world into one large accessible market, where traderscan do real trade using online technology (Gandolfo &amp Trionfetti,2013).This has led to the development of trade relations between traders indifferent countries and opened opportunities for partnerships andinternational ventures. Moreover, technology in communication hasmade it easy for traders to acquire customers by reducing the cost ofacquiring new customers and maintaining their clientele.

Anotherfactor that has facilitated the rapid growth of international tradeis the development of stronger, faster and reliable internationalinfrastructure. Countries have built reliable transport structuresfor international trade in strategic locations that have opened doorsfor foreign traders to engage local traders (Gandolfo &ampTrionfetti,2013).For instance, the development of modern sea ports, reliable airportsand airlines has connected more countries for trade. According to Coxet al (2013),the air transport has also become effective and efficient, especiallywith the opening of more airlines in the world compared to the pastwhen the world relied on a few airlines. In addition, the applicationof technology in transport has made it effective and efficient totransport and track goods and services from one country to another ina time that is feasible for business transactions.

Changein government policies on international trade is another factor thathas significantly contributed to the rapid growth of internationaltrade. Specifically, governments have removed restrictions thatpreviously prevented effective and-border trade. Governments haveeased or removed restrictions to international trade that werecharacterized by high tariffs and duties (Coxet al, 2013).For instance, countries have removed unnecessary embargos, a traderestriction that prevents entry of certain goods or products fromcertain countries. In addition, governments have removed restrictionsin terms of bureaucratic procedures that are formulated to discourageimportation of certain goods. As a result, the world market isaccessible to residents of a country, and they easily engage as partof the global market.

Anothersignificant factor that has led to the rapid growth of internationalbusiness is the growth of consumer demand for foreign products. Asthe world is becoming a global village, consumers are beinginfluenced by the international trends to buy goods that are notavailable in their local markets (Gandolfo &amp Trionfetti,2013).As a result, their need for goods and services available in othercountries has grown over time. This increases the demand for foreignproducts by local consumers, just like the foreign consumer demandgoods and services from the local markets. According to Coxet al (2013),the growth of a trade is facilitated by the growth of the demand aproduct in a particular market. Consumers have continuously demandedforeign goods and services and are in need of knowing about theexistence and development of foreign products.

Theglobal competition in the market is another market factor that hascontributed to the rapid growth of global business at a significantrate. In the recent past, competition has changed from localcompetition in local markets and has become a global phenomenon. As aresult, traders seek global markets to maintain their competitiveadvantage and create more markets for their products. In addition,competitions at the global market forces producers to produce qualityproducts that will be appreciated in the world market (Coxet al, 2013).For instance, a producer is forced to produce quality products for aforeign market in order to compete with the local traders of thecountry he is targeting. As a result, traders and consumers consciousof the quality of products they trade, which promotes globalcompetition and facilitates rapid growth of international trade.

Theimproved political environment has increased the growth ofinternational business in the world. Creation and maintenance of goodpolitical relationships among countries have created a politicalenvironment that is friendly for international business (Daniels etal, 2011). As a result of such an environment, international businesshas thrived and grown at a rate that is higher than the time whencountries had no relations, such as world wars and cold war times(Gandolfo &amp Trionfetti,2013).International trade has grown rapidly because the improved politicalenvironment has facilitated business relations among nations andallowed traders from different countries to interact throughbusiness. The development of trade between countries is dependent onthe political goodwill and the relationship between the country ofthe seller and that of the buyer. This way, improved internationalrelations opens doors for international trade.

Cooperationamong countries on transnational and cross-national issues have ledto the rapid growth of international business. Cooperation ofcountries in these two dimensions of international relations promotesthe engagements and interaction of traders and governments in tradeamong other aspects of cooperation (Coxet al, 2013).One of the main areas of trade cooperation between countries is theformation of trade agreements and trading blocs that facilitateinternational trade among the members. For instance, formation oforganizations like the European Union, the ASEANFree Trade Area(AFTA),the North American Free Trade Agreement (NAFTA), among others haspromoted international trade among their members.According to Daniels et al (2011), trade is a practice that dependson the relationship existing between one country and another. As aresult of these relations, the tariffs, duties and transactionsinvolved in international trade is facilitated for internationalbusiness.

Inaddition, international business has been facilitated by theformation, expansion and operations of international institutionsprovide services to ease the conduct of global trade.For instance, the formation of the International Monetary Fund, theWorld Bank has facilitated the financing of trading relations amongnations and provided vital information about trade and investmentopportunities. At the same time, international business agreementinstitutions like the World Trade Organization have facilitated therapid growth of trade through the promotion of agreements like theGeneral Agreements on Tariffs and Trade (Gandolfo &amp Trionfetti,2013).In regional scene, the role of institutions is seen in thedevelopment of organizations like the MalaysianExternal Trade Development Corporation (MATRADE), the Ministry ofFinance, the Ministryof International Trade and Industry (MITI).These institutions give important services that have facilitated thegrowth of international business in the region.

Roleof the Selected Institutions

Thegrowth of international business in the world and in regional marketsis facilitated by a number of institutions, in addition to thegovernments involved. These institutions promote the growth ofinternational trade by offering certain services that facilitate thetransfer of funds, sourcing of finance, processing of transactionsand formulation of policies that guide international business.

Oneof the institutions that ease the conduct of international businessis the Ministryof International Trade and Industry (MITI) in Malaysia.The main role of the ministry is to provide directions and formulatepolicies that seek to achieve the goals of the country’s industriesand international trade (MITI, 2015). One major service provided bythe ministry is seeking and formulating foreign multilateral andbilateral trade relations between Malaysia and other countries.Through this service, the ministry seeks trade relations betweenMalaysia and other countries in order to create markets for thecountry’s products. At the same time, the ministry creates tradeopportunities for foreign traders in the country and facilitatestheir transactions. More importantly, this service facilitatesinternational investment in Malaysia.

TheMinistryof Finance (MOF) of Malaysia is another important institution thathas eased the conduct of international business, especially betweenthe nation and other countries.One major service provided by the ministry is the formulation of themonetary and fiscal policies that govern local and foreign trade(MOF, 2015). Among the policies formulated by the ministry is thetariffs that affect the international trade through duties levied ongoods and services entering and exiting the country. In addition, theministry controls the local investment environment by formulating thelocal excise duties and the taxation rates in the country (MOF,2015). Therefore, the ministry is responsible for creating a friendlyeconomic environment for attracting international investments inMalaysia. This facilitates the growth of international businessinvolving Malaysian and other countries.

Anotherinstitution that has eased the conduct of international business isthe MalaysianExternal Trade Development Corporation (MATRADE).This is an institution that is focused on exposing the tradeopportunities in Malaysia and attracting local and foreign investorsinto the country though conventions (MATRADE, 2015). One majorservice provided by MATRADE is the MATRADEExhibition and Convention Centre (MECC)(MATRADE, 2015). This is a trade center with conventions andexhibition halls for local companies to showcase their products tolocal and foreign traders and investors. The center also has meetinghalls and facilities to promote international conferences that seekto promote the country’s trade (MATRADE, 2015). This way, MATRADEpromotes Malaysia to the worlds and helps attract internationalinvestment into Malaysia.


Internationaltrade has grown rapidly because of the developments in technology andadvancements in the communication channels and transportinfrastructure in the world. Promotion of business by governmentsthrough economic and cooperation has led to the growth ofinternational business. Global competition, the growth ofinternational trade institutions and increase in consumer demand arealso factors that have led to the growth of international trade.Moreover, institutions like finance and economic ministries inMalaysia have eased the growth of international business.


Cox,H., Clegg,J.L, &amp Gillies,G.L. (2013). TheGrowth of Global Business.London: Routledge

Daniels,J., Radebaugh, L., &amp Sullivan, D. (2011).&nbspInternationalBusiness: Environments and Operations&nbsp(15thed.). Pearson Education

Gandolfo,G., &amp Trionfetti,F. (2013). InternationalTrade Theory and Policy.New York: SpringerScience &amp Business Media

MalaysianExternal Trade Development Corporation (MATRADE),2015. RetrievedFrom, &lthttp://www.matrade.gov.my&gt June 11, 2015

Ministryof Finance Malaysia, MOF.RetrievedFrom, &lthttp://www.treasury.gov.my/index.php?lang=en&gt June 11,2015

Ministryof International Trade and Industry (MITI),2015. Retrieved From, &lthttp://www.miti.gov.my/cms/index.jsp&gtJune 11, 2015