International Business Is The Engagement Of Trade And Investment On An International Scale
National governments have an essential role in the facilitation and regulation of intern ational business. The interactions between economic, political and legal mechanisms of governments have a direct impact on the flow of trade and can have impacts for both domestic and international businesses. However, through these mechanisms governments commonly increase the risk and costs of engaging in international business as domestic business is generally protected to the detriment of firms seeking to internationalise. Conversely, governments also play a role in the creation of international business effectiveness through the policies implemented and the investment in current resources within a nation. Despite this, governments tend to focus more on the protection of the national economy rather than encouraging the attainment of an absolute advantage to contribute to an efficient business environment where resources are allocated in the most beneficial way for the international trade.
Governments increasing risk and costs
The political and economic structure of a host nation has significant importance to businesses seeking to internationalise. The ideal context for international business to occur is in a free trade environment where governments do not intervene with the market forces and allow international trade to occur naturally due to a capitalist stance (Scott, 2016).
The absence of…