Q.“International business is more than international trade”. Comment.

International business is far wider than international trade. Trade means only the export and import of goods and services, whereas international business also includes overseas production and marketing, foreign investment (FDI and portfolio), licensing and franchising, and the movement of capital, people, technology and intellectual property across borders. So trade is only one part of the much larger whole that is international business.

The claim explained

Many people wrongly equate international business with international trade. In reality, international trade is only one part of international business, which is a far broader term. Hence, international business is indeed "more than" international trade.

What international trade covers

• Only the export and import of goods and services between countries.
• Historically, trade in goods was the most important part of doing business abroad — but it is still just one slice of the whole.

What international business additionally covers

International business = business activities carried on across national frontiers, and its scope is much wider:

• Merchandise (goods) exports and imports — trade in tangible goods that can be seen and touched.
• Service (invisible) exports and imports — trade in intangibles such as tourism and travel, transportation, banking, insurance, communication, consultancy, construction, advertising, education and other services.
• Licensing and franchising — allowing a party abroad to produce and sell goods (licensing) or run services (franchising) under one's patents, trademarks or copyrights for a fee.
• Foreign investment — investing funds abroad for a financial return, of two kinds:
  • Direct investment (FDI) — investing in plant, machinery and property abroad, giving a controlling interest (joint venture or wholly owned subsidiary).
  • Portfolio investment — acquiring shares or giving loans to a foreign firm to earn dividends or interest, without direct involvement in operations.

Wider cross-border flows

International business involves not only the movement of goods and services, but also of capital, personnel (people), technology and intellectual property such as patents, trademarks, know-how and copyrights.

Overseas production and marketing

• A major development is that firms increasingly invest in and produce within foreign countries — not just trade with them — to get closer to foreign customers and serve them more effectively at lower cost.
• So international business is made up of both the trade AND the production of goods and services across frontiers.

Conclusion of the argument

Since trade is only buying and selling, while business also includes producing, investing, licensing/franchising and moving capital, people, technology and intellectual property abroad, the whole (business) is clearly larger than the part (trade).