Identify the major barriers that hamper global business in an open economy.

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Even when countries try to have open trade with least government involvement, there are still things that can make it hard for businesses around the world to work together. Here are some big reasons why:

  1. Government rules and taxes:

    • Tariffs: These are taxes on things that are brought in from other countries, which can make them cost more and harder to sell compared to local stuff.
    • Quotas: Governments sometimes put limits on how much of something can be brought in from other countries.
    • Subsidies: This is money given by a government to local businesses, which can make it unfair for foreign companies.
    • Other rules: There are also rules about how things should be made and sold, like quality standards and getting special permissions, which can be tricky for foreign companies.
  2. Challenges in the business world:

    • Currency changes: When the value of money changes, it can affect how much it costs to sell things in other countries.
    • Political problems: Things like fighting, corruption, and sudden changes in the law can scare off investors and mess up how things get made and sold.
    • Bad infrastructure: If roads, internet, or power supplies aren't good, it's harder and more expensive to do business.
  3. Cultural differences:

    • Language issues: Not understanding each other can cause problems in talks and deals.
    • Different ways of doing things: Business customs, social rules, and legal systems vary from place to place, which can be tough for outsiders to navigate.
  4. Logistical and operational challenges:

    • Distance: It costs more and takes longer to move things far away.
    • Protecting ideas: Some countries don't have strong laws to protect new inventions and designs, making it risky to do business there.
  5. Other things to consider:

    • Environmental rules: Making things while following strict environmental rules can be expensive.
    • Labor laws: Rules about wages, hours, and workers' rights can affect how much it costs to make things.

All these factors make it hard for businesses to work smoothly together across borders. To succeed internationally, companies need to know about these challenges and come up with ways to deal with them.

answer by Mehdi Nisar 5 months ago