International trade is a trade that transcends international borders. This is in direct contrast to domestic trade, which is the trade that occurs within a territory or local market. International trade has been made possible by advances in technology that make it easier to communicate and coordinate the transfer of goods and services across territories. The impact of international trade can be seen in various areas including the economy, jobs, outsourcing and unfair labor practices.
One impact of international trade is its effect on the economy of the nations engaging in the trade. This effect is felt by both less developed and more developed nations. More developed countries benefit by purchasing raw materials and finished products from less developed countries. Less developed countries gain by getting much needed financial resources from the trade. For instance, some developing countries in Africa and the Middle East have some natural resources like crude oil, metals and precious stones that they can sell to other countries in exchange for financial resources. Indeed, the economies of some of these countries are dependent on the financial resources. Most developed countries that do not have resources like crude oil depend, to a large extent, on the supplies from these nations.
International trade also has a strong effect on jobs in the more developed countries. Most companies now engage in outsourcing, which is a direct outcome of international trade. These companies prefer to hire workers from other countries who can do the same or more work as their local employees for a fraction of the cost. This reduces the number of jobs that are available to the local workforce. It may also lead to unfavorable competition in which the local workers are forced to compete with international workers from countries with lower standards of living who are willing to do the same job for far below the minimum wage.
This particular impact of international trade leads to the fears that some unscrupulous business associates might exploit cheap labor in a manner that is detrimental to the workers from poor countries. For instance, some western companies move their companies to some Asian countries with lax labor laws where they tend to exploit the local workforce by paying them very little compensation for hard labor. Some concerns also arise about the potential of using underage labor in the manufacturing sector, especially the apparel and toy-making sectors. This is an undesirable impact of international trade.