International Trade Theory the Decision Term Paper

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"Policy issues attract a substantial attention from both economists and policymakers in the recent years" (Obsteldt). With such attention being focused on the policy issues, it makes more than a little sense, to focus the attention there as well in order to have a higher likelihood of success than without the same attention. In order to focus attention on those policy issues it must be understood what those policy issues entail.

Those issues can include such items as exchange rates, currency crises and other financial events taking place in either country. The MIT study stated other components should also be addressed. "These include theory and evidence of exchange rate-based stabilizations....sovereign debt management and reform of the international financial system" (Obsteldt). Since there is currently no major problems between the two countries, both countries participate in the World Monetary Fund as active members, and neither country is mismanage their debt management, it would seem that both countries would benefit from more trade between the two entities, which would also lead to the assumption that a business entity would also benefit from the same factors.

Reform of the international financial system was really not a major factor in this study since it has already been reformed in previous years. To reform the system again in order to facilitate a common financial foundation between the two countries does not make a lot of sense at this particular time.

Other relevant factors in this decision are whether the costs of doing business in India is similar to the current costs of doing business elsewhere, and they seem to be very similar.

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The expense factors in India are actually much lower than other developed countries in the world, although they are slowly but surely catching up. With these factors taken into consideration there seems to be a fairly certain probability that the business will be successful and that the company will benefit from opening and initiating business in India.

Studying the cost factors of doing business in India, especially in regards to the international trade theory, it is found that the cost factors, the expenses and the relative commonality of the two economies are such that conducting business between the two countries can be beneficial and profitable to both.

With a majority of the components from the international trade theory having been studied and applied to this situation, the proposal is purported to be a viable option for the company. The company would benefit from establishing a business in a foreign country, and the foreign country would benefit from having additional services and products available for its citizens.

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