Tag Archives: global market system

Increased Global Competition

3 Jul

Increased Global Competition

Free International trade has brought a harsh competition among producers from different countries. Imports have an important effect on different industries from any country. Also many firms from, let’s say, Japan have become very wealthy and well-known on international market like: Nintendo, Sony, Honda, Panasonic, Mitsubishi. However, there are a lot of firms that can’t compete, because their international competitors make better quality products or price of their goods are relatively lower, or even both these qualities may be present.

So is this competition among firms from the entire planet good or bad? Even if domestic producers may get hurt and a lot of people should find new jobs, foreign competition clearly benefits consumers and society in general. Imports break down monopoly of existing firms, and decrease the price of goods and services. Foreign competition forces domestic producers to improve their production quality and productive efficiency. However many domestic firms may compete successfully in the global market system.

What about Firms which aren’t able to compete? The truth is that they should go out of business. Economic losses mean that the scarce resources aren’t used efficiently. Alternative uses of them may be more profitable and improve the output of the whole country.

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