The traditional nature of financial services is usually associated with inefficiencies, high costs of operation, and inaccessible services. A lot of people and small businesses can’t bank, raise loan financing, or get investment management because of rigidly observed processes that bring limited transparency and long paper works. Furthermore, this cannot keep up with the fast-changing technology and consumer behavior in this modern, digital age, hence requiring more innovative and user-friendly financial solutions.
It is fast emerging as a transformative platform in FinTech, which arouses both ‘fin’ and ‘tech’ to engage in financial services better and more efficiently. It has introduced a wide array of services and products, including mobile banking, peer-to-peer lending, digital wallets, robo-advisors, blockchain technology, and more that seek to extend ease, efficiency, and customer-facing services of financial services.
Robo-advisors, through the use of artificial intelligence and machine learning, provide customized investment advice and portfolio management at lower costs than traditional financial advisors. Blockchain technology provides secure, transparent transactions that reduce the risk of fraud and enhance the level of trust in digital financial systems. Moreover, very often, advanced analytics and data-driven insights are embedded into fintech solutions to facilitate informed financial decision-making by the user.
Fintech streamlines operations in business through automation of activities like invoicing, payroll, and expense management. It improves financial planning and offers access to capital with new innovations in lending and crowdfunding platforms. Thus, both individuals and businesses can leverage the power of faster, cheaper, and highly personalized financial services that fintech offers for driving financial inclusions and economic growth.
In summary, fintech is reshaping the financial industry by addressing the limitations of traditional financial services and providing innovative, accessible, and efficient solutions that meet the evolving needs of consumers and businesses alike.
Every single day, a fleet of ships, trucks, and aircraft carries across the world millions of tons of goods. Your car may have been exported from South Korea, your T-shirt from Bangladesh. Every country in the world exports—sells products and services abroad—and imports—buys goods and services abroad for itself. These exports are products and services, and of course, goods; they can either be manufactured items or agricultural commodities. Services are a dynamic and fast-expanding part of trade and include all intangible goods such as advertising and telecommunications.
But this network of trade is more than just sellers and buyers. In fact, global trade is a highly complex system in which long supply chains make it possible for a product to be sourced, assembled, packed, and sold in far-flung parts of the world. The stuff in your phone or your shoes, or the tuna fish you had for lunch, may have been produced in one country, processed in another country, assembled in a third country, and packaged somewhere else—all before reaching your local store.
Historical Context
Before the 19th century, most European countries aimed at self-sufficiency through a system called mercantilism. The main principles of mercantilism were to maximize exports and minimize imports with the view of pluralizing a country’s supply of gold. The system resulted in stringent tariffs, which are taxes on imports, not for the sake of preventing foreign goods from entering the country but to profit from it. Mercantilism raised obstacles to international trade. Countries would strive to produce as much as they could by themselves, even doing things at which they were not efficiently capable of doing.
Shortly thereafter, in the late 18th century, classical economists began to reject these prevailing views and instead focused on the principle of comparative advantage: the idea that the world is better off when countries specialize in what they’re comparatively better at than other countries, and import the rest.
This is known as specialization. When countries don’t have to use their labor and other resources to create things like textiles and wine, they are free to focus on other industries and even create whole new products that never existed before. Perhaps the best articulation of this idea from a classical economist is that actually counting the amount of gold a country was accumulating was backwards because that portrayed a country’s power on disruptive activities.
How International Trade Has Evolved
Now we judge countries’ economies on productivity, that’s their ability to make the best use of their limited resources. There is even a measure of it: Gross Domestic Product, or GDP, which is just a measure of the sum of all the final goods and services that a country produces in a year. What each country can produce efficiently and successfully depends on each individual country’s human, physical, technological, and financial resources. For example, Costa Rica is very good at exporting pineapples and coffee, while Germany exports millions of cars and computers.
These new ideas marked the actual increase in international trade. Measuring GDP in place of just gold spurred trade and ignited growing economies. Technological and travel advances made remote markets much more accessible at the same time. Gigantic container ships, cargo planes, and inexpensive, instantaneous communication connected the world’s producers to professional customers all around the globe in many multiples.
In new found wake of the world war, the newly formed United Nations established a General Agreement on Tariffs and Trade, which provided for dramatically reduced trade barriers, such as tariffs, and established regulations that would govern how countries were to conduct free trade with one another.
The GATT became the World Trade Organization in 1995, which sought to remove even further impediments to continue pacing with a changing world. The WTO also expanded the definition of trade to include — and not only that but services too — and itNOW created laws governing intellectual property, such as copyright and patents. In this way, the WTO is also the forum by which countries may come together to establish the rules and regulations regarding international trade and bring complaints if their respective governments do not uphold those rules.
Benefits and Risks of International Trade
A country cannot be successful if, by the principle of comparative advantage, it cannot sell a high-quality product at a good price for the customer, or if new technology makes it uncompetitive in business. Stores or factories may be forced to close down; jobs will consequently go. That country will then have to refocus its economy around something it can be comparatively good at. This is what international trade is like.
But some countries and industries are accused of skirting the rules of international trade, and that’s where the WTO tries to come in. For instance, labor unions in the United States bicker that the WTO doesn’t protect U.S. wages from the competition of unfair trade in China. Some developing countries say the WTO rules do not recognize their unique situations. For example, farm subsidies from wealthy governments create barriers to cheap cropland sellers from small or poor countries to export crops into a country.
Bottom of Form
The challenges emerging in international trade are numerous and complex. For example, some countries embark on bilateral and regional trade agreements that assist in dealing with their unique needs and trade plans. In 1994, NAFTA was created to facilitate more trade between the United States, Mexico, and Canada. Such agreements have become more common among countries with similar objectives. From 1990 to 2015, world trade has increased by more than five times, from $3.5 trillion to $19 trillion.
International trade has, therefore, created relationships between nations, and global economy that is more closely integrated than ever before, characterized by cheaper and higher quality goods and services for more significant portions of the world’s population. It has created millions of jobs and enhanced international connectivity, hence creating stability in the world. The same trade harms men, businesses, and communities whereby, in the aspect of imports, local companies become unable to compete with cheaper or better goods from somewhere else. Of course, trade is bound to create some winners and losers, but such an aspect is simply inseparable from modern life.
