International trade substantially impacts emerging economies like China and Eastern Europe since it shapes their political and economic landscapes. Over the years, globalization and the rising interconnectedness of countries have resulted in an exponential development of international trade. The situation has promoted the exchange of products and services globally, generating multiple effects that influence emerging economies’ outcomes. However, the impact of international trade on such economies is a complicated phenomenon that can be beneficial and difficult. Analyzing international trade allows individuals to explore its diverse dimensions, including positive and negative contributions and anticipations in the next 20-50 years.
Positive Impacts of International Trade on Emerging Economies
Economic Growth
International trade fosters economic growth in emerging economies, allowing them to explore larger markets across borders. It enables such countries to export their products and services to international customers, enhancing their revenues (Bostan et al., 2023). Subsequently, countries exploit their resources, increasing their production levels. Likewise, participating in international trade exposes a country to rampant new technologies and management procedures in developed economies. Consequently, the country records improvements in competitiveness, fostering economic growth. Besides, international trade encourages domestic investment since it motivates businesses to invest in rationalizing their operations and upgrading their equipment to meet diverse customer needs. It also stimulates foreign investment since investors are attracted to economies with export-centered approaches, leading to more industries and job creation, which, in turn, promotes economic growth. Thus, foreign trade promotes economic growth by facilitating investments and exposing a country to a larger customer base.
Improved Productivity
Global trade improves a country’s productivity due to exposure to stiff competition. It allows domestic businesses to be more competitive, encouraging them to strive for innovation, quality improvement, and efficiency. Subsequently, companies are forced to endorse the best practices and streamline activities, enhancing productivity. Also, global trade exposes local businesses to new technologies and innovative strategies, allowing them to adopt advanced production tactics and thus raising productivity (Bostan et al., 2023). Besides, international trade provides countries with resources that may be scarce locally. So, such countries can maximize inputs to enhance efficiency and production capacities. Furthermore, international trade promotes interactions between businesses and diverse customers, helping local firms adopt new strategies that improve productivity. Therefore, global trade increases the productivity of emerging economies because it exposes local firms to intense competition, new technologies, and a diverse customer base.
Innovation
Global trade exposes companies from emerging economies to competition, encouraging them to innovate continuously to remain competitive. Subsequently, local businesses devise new approaches to differentiating goods and services (Khan et al., 2019). Likewise, companies can access diverse markets and customers, stimulating them to develop innovative products and services to meet customer demands and preferences. Furthermore, global trading enables emerging economies to access multiple resources. The situation promotes innovation since local companies strive to devise new strategies to utilize such resources. Hence, international trade promotes innovation among emerging economies by exposing them to multiple customers, intense competition, and resources.
Negative Impacts
Effect on Domestic Industries
International trade adversely affects local industries’ development due to competition from global manufacturers. Foreign competition and unrestricted imports make upcoming industries collapse. For instance, if local businesses are not competitive in innovation and cost, they face external pressure from inexpensive imported products and services, reducing domestic production. Feng & Wang (2021) outline that change in product demand alters industrial structure. Likewise, firms seeking to reduce production costs may relocate their manufacturing facilities to nations with lower operation and labor expenses, leading to deindustrialization in their mother countries. Thus, global trade leads to deindustrialization due to competition from cheap exports and the relocation of production facilities to other countries.
Environmental Issues
Global trade poses environmental concerns like resource extraction. The increasing demand for commodities and inputs in international markets results in the overexploitation of resources. In the struggle to reduce operating and production costs, industries may prioritize temporary gains over resource management, leading to environmental degradation. Likewise, pollution is an environmental concern since industries that export products and services may fail to adhere to existing regulations, increasing carbon emission levels (Tang et al., 2022). Besides, some export-centered businesses like textiles and agriculture are water-intensive. Therefore, meeting customer demands of global markets may strain domestic water resources, resulting in water scarcity. Thus, global trading results in environmental concerns like resource overexploitation and pollution as they strive to meet diverse customer demands.
What Can We Expect From Them In The Next 20–50 Years?
In the next 20-50 years, we anticipate emerging economies to record high economic growth rates. The situation would occur due to the rising rates of urbanization and population growth globally, encouraging them to participate in international trade successfully. For instance, the growing population of multiple countries worldwide would stimulate emerging economies to enhance their production capacities to meet the needs and demands of such individuals, fostering economic growth. Likewise, emerging markets are likely to develop in the next 50 years due to the anticipated technological advancements. Increasing access to international markets would enable emerging economies to utilize technology to improve productivity, leading to competitiveness. Also, adopting advanced technologies would enable emerging economies to devise effective production ways, promoting innovation (Khan et al., 2019). Technology would enhance e-commerce activities, allowing businesses to serve online customers, thus, enhancing growth and development.
Besides, emerging markets are expected to adopt sustainable production activities due to the rising awareness of social and environmental concerns regarding international trade. Subsequently, they are likely to adopt green technologies and renewable energy sources to stabilize economic growth and environmental maintenance (Khan et al., 2020). Furthermore, emerging economies are anticipated to invest in educating and upskilling their workers to promote flexibility when meeting the needs of evolving industries and customer demands. For instance, in the next 20 years, individuals will stop consuming some commodities and services, forcing companies to create new products. So, such companies should continue upskilling their employees to keep pace with the changing industry demands.
Conclusion
International trade impacts emerging economies like China and Eastern Europe. It fosters economic growth in emerging economies by allowing them to explore larger markets across borders. It enables such countries to export their products and services to international customers, boosting their revenues. Also, global trade improves the innovation and productivity of emerging economies as they struggle to meet the demands of diverse customers. However, international trade poses challenges for emerging markets like environmental concerns and deindustrialization. In the next 20-50 years, emerging markets are anticipated to record high economic growth rates due to rising urbanization and population growth globally. Also, technological advancements like e-commerce practices promote the success of emerging economies. Lastly, emerging markets will likely implement sustainable practices and upskill their workers to meet evolving industry needs.
References
Bostan, I., Toma, C., Aevoae, G., Robu, I. B., Mardiros, D. N., & Topliceanu, Ș. C. (2023). Effects of internal and external factors on economic growth in emerging economies: Evidence from CEE countries. Eastern European Economics, 61(1), 66-85.
Feng, Y., & Wang, Y. (2021). The Impact of Deindustrialization on Economic Growth-Evidence from China. International Business Research, 14(5), 1-18.
Khan, S. A. R., Yu, Z., Belhadi, A., & Mardani, A. (2020). Investigating the effects of renewable energy on international trade and environmental quality. Journal of Environmental Management, 272, 111089.
Khan, Z., Lew, Y. K., & Marinova, S. (2019). Exploitative and exploratory innovations in emerging economies: The role of realized absorptive capacity and learning intent. International business review, 28(3), 499-512.
Tang, Y., Zhu, H., & Yang, J. (2022). The asymmetric effects of economic growth, urbanization and deindustrialization on carbon emissions: Evidence from China. Energy Reports, 8, 513-521.
write