International Economic Relations

Doing business in today’s global marketplace requires an understanding of international economic relations. International trade, foreign direct investment (FDI), multinational corporations (MNCs), and the World Trade Organization (WTO) are all important aspects of the international economy, and each is covered in this section.

International business is important because it allows companies to expand their markets. By expanding into new geographic regions, a company can increase its revenues and profits by tapping into a new pool of customers. International trade also allows firms to access new technologies, raw materials and labor resources that may be more readily available in other countries than in their own.

International trade has been an important part of the global economy since ancient times; however, during most of human history it was primarily conducted between countries located within close proximity of one another–so-called “intra-national” trade rather than “international” trade (which refers specifically to cross-border transactions). The rise in transportation costs during the early 19th century led many governments around the world to encourage free movement between nations as a way both for improving economic development as well as preventing war between neighboring countries (for example by opening up ports).