7

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INTERNATIONAL TRADE

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TOPICS

Trade of Today
The Impact of Technology on Global Trade
Trends in Global Supply Chain Management
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Preparing for Future Challenges and Opportunities in International Trade

LEARNING OUTCOMES
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Understand the current state of global trade
Explore how emerging technologies, such as digital platforms, automation,
artificial intelligence, and blockchain, are transforming global trade practices,
supply chains, and market access
Examine trends in global supply chain management
Prepare for future challenges and opportunities
Foster a forward-thinking mindset with a focus on adaptability, innovation, and
long-term planning
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Utilize insights into future trends to inform strategic decision-making

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Trade of Today

A Short Overview

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International trade is a foundational element of the global
economy, encompassing the movement of goods and services
across borders. While the exchange of commodities - such as
food, machinery, and fuel - serves as its backbone, the trade of
services like banking, consulting, and finance is equally vital to
economic relationships. This flow of goods and services facilitated through commer-
cial agreements and regulatory frameworks, including the European Single Market
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and the North American Free Trade Agreement (NAFTA), which aim to reduce or
eliminate tariffs and border checks to ensure efficient, cost-effective trade. In cases
where no such agreements exist, the World Trade Organization (WTO) provides a
FO
standardized set of rules governing trade practices worldwide.
The importance of international trade extends beyond access to new markets;
it enables countries to obtain goods that are either unavailable domestically or
prohibitively expensive to produce. For instance, China, currently the world's largest
manufacturing hub, leads in exporting goods to other nations. This cross-border
trade grants corporations access to a global customer base, providing consumers
with an extensive variety of products and services. Although international trade often
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incurs higher costs than domestic trade - largely due to transportation and
distribution expenses - the potential profits from reaching new markets generally
justify these risks.
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The concept of international trade is deeply rooted in history,

tracing back to ancient trade routes like the Silk Road, which connected
Asian markets to the Mediterranean over two millennia ago, While such
trade can fuel economic growth, it is also subject to various restrictions.
Governments sometimes impose tariffs to raise the price of imports,
making domestic products more appealing, or enforce trade barriers

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Trade of Today

A Short Overview

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as a form of sanction against nations engaged in activities like
terrorism, human trafficking, or weaponization. Thus,
international trade not only reflects economic dynamics but also
serves as a significant geopolitical tool, demonstrating a country's
position and influence on global stage.

Statistics and Facts of the Global Economy

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According to Dyvik (2024), since 2020, the global economy has weathered two
significant crises, each leaving a deep mark on its landscape. The first shock came
with the spread of the COVID-19 virus, which prompted mass closures of businesses
FO
and shops worldwide, sparking a severe economic slowdown. Just as recovery
efforts were gaining momentum, a new disruption emerged: in February 2022,
Russian President Vladimir Putin's decision to invade Ukraine unleashed waves of
inflation across the globe. While initial concerns pointed to a potential global
recession, by early 2024, most countries have shown more resilience than
anticipated, with consumer confidence rising steadily in late 2022.
However, renewed conflict arose in October 2023 when Hamas launched an
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attack on Israel, leading to an intensified conflict in Gaza and fueling further global
uncertainties. This unrest, compounded by Houthi militia attacks on vessels in the
Red Sea, has disrupted vital international trade routes, challenging economic
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stability.
Economic activity is often assessed using specific measures known
as economic indicators, with one of the most crucial being gross domes-
tic product (GDP). GDP represents the total monetary value of all goods
and services produced within a country in a given year. Although global
GDP experienced a setback in 2020 due to the COVID-19 pandemic, it

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has shown consistent growth over recent decades and is projected to continue
rising. As of 2022, the United States held the top position in GDP, followed by
China, Japan, and Germany. While these economies are likely to retain their
dominant status, some of the most rapid growth rates are now emerging from
countries in the Global South.
Among these shifts,
China's transformation stands
out. Once
R
considered a
developing country, China
surged to become the world's
FO
second-largest economy and
its top exporter. This rapid
economic expansion has not
only reshaped global trade
dynamics but has also
exerted a profound influence
on world politics, intensifying
T

diplomatic tensions between

Source: World Trade Organization (2024). https://www.statista.com/statistics/264623/leading-export-
China and the United States. countries-worldwide/
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In terms of global unemployment, it stood at approximately 205

million people in 2022, marking a decrease from previous years.
However, the Arab World had the highest unemployment rate in 2021.
Meanwhile, nations like Japan, South Korea, Germany, and Italy face
challenges from aging populations, leading to a shrinking working-
age demographic. This trend suggests potential future labor
shortages, with these countries increasingly relying on migrant labor
to fill the gap.

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Meanwhile, the economic consequences of the Russia-Ukraine conflict led to a
sharp rise in the prices of goods and services throughout 2022 and into 2023. Global
inflation spiked to nearly nine percent in 2022, easing to around seven percent the
following year. Although inflation rates declined across major economies in 2023,
they remained elevated in some regions. Notably, Venezuela and Zimbabwe
experienced the highest inflation increases in 2022, while South Sudan and Macao
reported the lowest.
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Below are statistical data on trades in GDP, trade in goods and services in 2022
based on the data from Ospina, Beltekian, and Roser (2024):
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NO

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Statistics and Facts of the Global Economy

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R
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NO

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Statistics and Facts of the Global Economy

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The Charts presented provide insights into the dynamics of international
trade and its relations to global economies. The first chart illustrates the trade
openness index, showing the share of exports and imports of goods and services
as a percentage of GDP across different countries over time, highlighting trends in
economic integration. The second chart depicts the exports of goods and services
in constant 2010 U.S. dollars, allowing for a comparison of export values adjusted
for inflation, which helps assess real growth in trade. Finally, the third chart shows
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the proportion of services within total exports for select countries, revealing how
different economies are diversifying their export portfolios, with some nations
relying more on service exports compared to traditional goods. Hence, the charts
FO
reflect the evolving landscape of global trade and the varying reliance on goods
versus services among different countries.

Global Trade 2024 Rebound

Global trade is expected a

resurgence in 2024, reversing the
decline seen in the previous year. In
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2023, the overall value of global

trade decreased by 3% with a
notable 5% drop in goods trade;
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however, trade in services

saw an impressive increase
of 8%. During this period,
developing countries and
South-South trade lagged
behind global averages,
highlighting their struggles

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Global Trade 2024 Rebound

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in the shifting economic landscape. Conversely, trade in environmental products
demonstrated growth, driven largely by the rise in demand for electric vehicles,
which significantly boosted the motor vehicle sector. While the outlook for 2024
appears optimistic, ongoing geopolitical tensions and disruptions in shipping
logistics pose potential risks and uncertainties to this anticipated recovery.
Meanwhile, as per an updated report from World Trade Organization
economists released on October 10, 2024, global goods trade is anticipated to see
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a 2.7% increase, a slight upward adjustment from the earlier forecast of 2.6%.
Looking further ahead, the volume of world merchandise trade is projected to rise
by 3.0% in 2025. However, ongoing geopolitical tensions and economic policy
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uncertainties present significant risks to this optimistic outlook. In contrast, the
trade of services shows a more promising trajectory based on leading indicators.
By mid-2024, inflation had sufficiently declined, enabling central banks to
lower interest rates. This decrease in inflation is expected to bolster real household
incomes and consumer spending, while reduced interest rates should encourage
increased investment by businesses.
Nonetheless, regional organizations are advised to remain watchful for
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potential setbacks, particularly regarding the escalation of regional conflicts, such

as those in the Middle East. The ramifications could be particularly acute for the
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countries directly affected, but the ripple

effects may also influence global energy
prices and shipping routes. Beyond
the economic aspects, the concern is
on the humanitarian impacts on those
caught in these conflicts.
Source: Canva Images

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The latest global trade forecasts for 2024 and 2025 show modest
adjustments, highlighting significant regional shifts. Europe is expected to see a
1.4% decline in export volumes and a 2.3 decrease in imports, largely due to
struggles in the automotive and chemicals sectors, particularly affecting Germany.
In contrast, Asia is projected to lead in export growth with an increase of up to
7.4% driven by key manufacturing countries like China and Singapore, while
countries such as Vietnam and India emerge as important “connecting”
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economies for trade. South America is rebounding, and North America's trade is
primarily influenced by the U.S., with Mexico showing stronger import growth.
Africa's export growth has been revised downward due to weaker imports from
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Europe, its main trading partner. While, the CIS region's imports are now
forecasted to grow by 1.1% thanks to unexpected GDP expansion, and
merchandise exports from least-developed countries (LDCs) are projected to rise
by 1.8% in 2024, rebounding from a decline in 2023, with imports also expected to
grow significantly.
See the next page for Table 1 of Merchandise trade volume and GDP growth,
2020-2025.
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Trade of Today

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Source: World Trade Organization (2024)

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NO

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The Impact of Technology on Global Trade

Technology has always influenced the course of trade, yet the swift

SA
advancement of digital innovations today holds the promise of deeply reshaping
global commerce in the coming years. The World Trade Report (2018) finds the
transformative potential of digital tools - especially the Internet of Things, artificial
intelligence, 3D printing, and Blockchain - in reducing trade costs, altering the
nature of traded goods and services, and shifting trade composition. The report
also forecasts the impact these technologies may have on global trade patterns
over the next 15 years and concludes its considerable benefits which require
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international cooperation to assist governments in ensuring the continuity of
digital trade and become an engine of inclusive economic development.
Anser (2023) mentioned that recent technological advancements have
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profoundly influenced international trade and finance, streamlining cross-border
transactions, lowering costs, and enhancing the speed and efficiency of financial
operations. The rise of e-commerce has transformed business operations, enabling
companies to tap into foreign markets and expand their customer bases. Coupled
with innovations in logistics and transportation, shipping goods across borders has
become faster and more affordable.
In finance, technology has birthed new instruments and platforms that
T

facilitate international transactions. Blockchain, for instance, holds the potential to

revolutionize finance by enabling quicker, more secure transactions while
minimizing the need for intermediaries. Fintech companies
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are also emerging, offering innovative financial services

to consumers and business globally.
Despite these benefits, concerns persist regarding
job displacemeant and income inequality, as automation
and artificial intelligence (AI) could replace human
labor in certain sectors, potentially leading to social
unrest. Additionally, the advantages of these technological

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strides may not be evenly distributed, exacerbating income disparities between

SA
countries and individuals.
The role of technology in diminishing trade friction became particularly
evident during the COVID-19 pandemic, with tools such as e-commerce, digital
payments, cloud computing, the Internet of Things (IoT), and 5G significantly
reshaping international commerce. AI is increasingly integrated into trade
processes, while robotics, virtual reality, and 3D printing are anticipated to play
more prominent roles in the near future.
R
In response to the potential of these technologies, the World Economic
Forum (2024), in collaboration with the MInistry of Economy of the United Arab
Emirates (UAE) and the Abu Dhabi Department of Economic Development,
FO
launched the TradeTech Initiative. This initiative gathered over 400 global trade
and technology leaders at the TradeTEch Forum in Abu Dhabi in February 2024,
coinciding with the World Trade Organization's ministerial conference MC13. The
forum addressed topics such as trade finance, green trade, logistics, supply chains,
and trade facilitation, focusing on accelerating the adoption of technology-driven
solutions in global supply chains.

Technological Advancements and International Trade

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Influence on Trade:

Significant advancements in communication

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technologies (e.g. internet, mobile) have enhanced

connectivity between businesses globally.
Reduced costs and time for communication and
travel have facilitated cross-border transactions.

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Technological Advancements and International Trade

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Transportation Improvements

Innovations in transportation (e.g. cargo ships, airplanes) have made it

easier to move goods internationally, allowing businesses to access global
markets.

Logistics and Supply Chain Management

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Enhanced logistics and supply chain management technologies have
improved operational efficiency and driven trade growth.

Challenges
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Dependence on Paper-Based Transactions: Must of international trade
still relies heavily on paper-based processes, which slow down transactions and
increase costs.
Trade Finance Gap: The global trade finance gap reached an estimated
$2.5 trillion in 2022, disproportionately affecting small and medium-sized
enterprises (SMEs). Rejected trade finance often results from inadequate
relationships with financial institutions, documentation challenges, and
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compliance issues.
Impact on Perishables: These challenges particularly
hinder the timely delivery of perishable goods, such as food and
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medical supplies, to markets.

Automation and Robotics: Automation and robo-
tics have displaced workers in certain sectors, particularly
manufacturing, leading to job losses.
Market Disruption: The rise of online market-
places has disrupted traditional business models and created
regulatory challenges across jurisdictions.

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Technological Advancements and International Finance

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Revolutionizing Transactions

Innovations such as blockchain, artificial intelligence, and big data

analytics have transformed financial transactions.
Enhanced efficiency, security, and cost-effectiveness in financial
operations.

Real-time Transactions
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Technology enables real-time money transfers, improving transaction
speed and transparency.
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Risk Management

Better risk management through improved assessment of

creditworthiness and fraud detection.

Facilitating Cross-Border Transactions

Secure payment systems and blockchain technology simplify

international business transactions
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Promoting Financial Inclusion

Mobile banking and digital platforms extend banking

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services to previously underserved populations.

Regulatory Challenges

Rapid technological change can outspace regu-

latory frameworks, creating potential loopholes.
Global finance requires coordination among
regulatory bodies, complicated by differing legal systems

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Technological Advancements and International Finance

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Regulatory Challenges

and infrastructures.
Financial institutions may resist regulation, leading to a “race to the
bottom” in regulatory standards.

According to Research...
R Xiong (2023) claimed strong evidence
increased technological intensity enhances exports
that

primarily by expanding the range of exported

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goods by utilizing a comprehensive product-level
dataset covering 118 countries from 1988 to 2006
and employing the Poisson pseudo-maximum-
likelihood (PPML) estimator. Specifically, a 1-percen-
tage point rise in a country's technological intensity is associated with an
approximate 0.12% increase in the variety of exported products, on average, across
all 15 sectors examined. Additionally, both total exports and the diversity of
exported products see greater increases in technology-intensive sectors.
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Trade on Developing Countries and Digital Technologies

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Supporting the previous claim, the World Trade Organization

(2024) found that the impact of technological innovations - such as
robotization, artificial intelligence (AI), servicification of production,
and reduced trade costs from online markets - on trade in
developing countries suggest that it will significantly boost trade
growth, with global trade expected to increase by two percent
annually until 2030 and developing countries seeing an even higher

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Trade on Developing Countries and Digital Technologies

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growth of 2.5% by analyzing the WTO Global Trade Model. As these countries catch
up technologically, their share of global trade will rise. Additionally, service exports
are projected to account for over a quarter of total trade by 2030, and
technological changes are likely to enhance services imports in manufacturing
outputs. Importantly, these developments indicate that technological progress
can occur alongside continued globalization, rather than leading to reshoring or
localization of production.
R
Case Study: The impact of block chain technology on international trade and
finance
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Blockchain technology holds significant potential to transform international
trade and finance by enabling secure, transparent, and tamper-resistant
transactions, thus enhancing trust and efficiency across global markets. Through
smart contracts, blockchain can automate various trade finance processes, such
as document verification and shipment tracking, which reduces both processing
time and costs. Furthermore, blockchain opens avenues for alternative financing
methods, including peer-to-peer lending and crowdfunding, which can
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particularly benefit small businesses that face challenges accessing traditional

financing. This technology also minimizes the risk of fraud and errors in
international trade, resulting in considerable cost savings for businesses. As
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blockchain technology matures and becomes more widely adopted, it

could fundamentally reshape the landscape of international trade and
finance, offering heightened security, transparency, and operational
efficiency.

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Trends in Global Supply Chain Management

A typical supply chain involves raw material suppliers or manufacturers,

SA
followed by road or rail transport to a seaport when maritime shipping is required,
then delivery to a destination port, and finally transportation to the customer,
whether a business or individual. As supply chains grow in length and complexity,
managing them has become increasingly challenging, especially amid factors like
market volatility, pandemic-related disruptions, and heightened environmental
scrutiny. These pressures have accelerated regionalization and spurred demand
for optimization, leading to the rise of trade tech aimed at enhancing supply chain
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resilience for more efficient, inclusive, and equitable global trade. Although it may
take time for this technology to fully integrate into the trade landscape, it's
valuable to understand the available technologies and their potential impact
FO
(Mukewar & Forbes Finance Council, 2022).
To Welch (2023), technology has influenced each step in the value chain,
targeting greater speed and efficiency. From suppliers’ access to raw materials to
production quality, these factors shape their client base. At the port, operational
efficiency and port capacity determine the volume of goods that can be managed,
while the size and speed of maritime transport impact how swiftly shipments
reach their destination.
Many innovations span multiple stages within the supply chain network,
T

driven largely by advances in computing power. This progress has led to greater
efficiency, enhanced safety, improved sustainability, higher productivity, predictive
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maintenance, reduced waste, and better yields.

Technology's influence on international trade operates at various
levels, leading not only to reduced costs and increased speed but also
enabling the trade of new products and services. It has contributed to
positive environmental impacts, lowered transactional costs - which
boosts trade volumes - and increased the participation of smaller
players within the trade ecosystem.

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Trends in Global Supply Chain Management

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7

Source: Welch (2023). https://www.entrepreneur.com/en-ae/growth-strategies/how-technology-affects-international-

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7

Source: Welch (2023). https://www.entrepreneur.com/en-ae/growth-strategies/how-technology-affects-international-

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Trends in Global Supply Chain Management

Technological Trends in Supply Chain

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In December 2020, a global survey by the World Economic Forum (2020)
identified five transformative technologies - IoT in supply chains, digital payments,
e-commerce platforms, cloud computing, and 5G - that are set to reshape the
traditional landscape of international trade. These innovations go beyond enabling
buyer-seller matchmaking; they also facilitate seamless communicate and
interoperability among service providers like trade financiers, insurers, and
logistics companies. In essence, these technologies have the potential to make
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cross-border trade more efficient, inclusive, and equitable for SMBs worldwide.

AI-Enabled Supply Chains

FO
Small businesses are increasingly adopting AI-based solutions,
elevating supply chain management through advanced demand
forecasting, end-to-end visibility, dynamic planning for inventory,
and automation to reduce waste. These elements are essential for
building predictive models and conducting correlation analyses to
assess the causes and effects influencing supply chain
performance.
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With data becoming more accessible, data-driven tools and

predictive analytics now allow for accurate forecasting of customer
NO

behavior and enhanced supply chain operations. While predictive

analytics has existed for some time, it has only recently become
affordable for SMBs, fostering new wave of tech-savvy
entrepreneurs. Research shows that AI-enabled supply
chain management can significantly benefit early adop-
ters, reducing logistics costs by 15%, lowering inventory
levels by 35%, and boosting service levels by 65%.

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Technological Trends in Supply Chain

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AI-Enabled Supply Chains

In response to recent supply chain disruptions, more SMBs are

committed to leveraging modern technologies to create scalable,
user-friendly digital experiences for employees and customers,
addressing supply chain challenges. Innovative solutions range
from cloud-based applications that streamline routine tasks to
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information systems offering real-time port call estimates.

Blockchain
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A blockchain-powered supply chain allows for systematic
documentation of shipment and transaction details, including
price, date, location, quality, and certification of goods. This
enhances transparency, traceability, and compliance while
reducing administrative costs and strengthening a company's
reputation. It also ensures that all stakeholders can access
consistent information digitally and securely, helping to minimize
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miscommunication and human error often associated with

complex paperwork and data transfers.
Blockchain and AI technologies further streamline
NO

processes by eliminating the need for physical docu-

ments like receipts, invoices, tax forms, contracts, and fi-
nancial reports. This enables SMBs to connect seamless-
ly with external stakeholders, fostering industry innova-
tion and supporting global trade.

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Technological Trends in Supply Chain

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Internet of Things

An Internet of Things (IoT) inventory system continuously

monitors supply levels of critical components in real-time, enabling
timely business decisions and preventing shortages. Additionally,
with modern supply chains reliant on the efficient operation of
various machines, IoT sensors can analyze key performance
R
metrics. For example, predictive maintenance within the supply
chain allows businesses to proactively address potential
breakdowns, thereby extending the overall lifespan of equipment.
FO
Digital Payments

Traditional trade and supply chain processes involve

numerous interconnected participants, making the reconciliation
and verification of information a cumbersome task. Payment cycles
can vary, often requiring human intervention for verification, which
can slow down transactions. This is where distributed ledgers
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become valuable; they function as secure, shared databases with a

copy of the data accessible to each participant. When funds are
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transferred or shipment details are recorded, the infor-

nation is instantly validated, shared with all supply chain
stakeholders, and updated in real-time.
Furthermore, only certified parties can initiate
transactions using digital signatures. This design facili-
tates fund transfers that are typically faster, cheaper, and
safer than manual methods. Such innovations could also

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Digital Payments

help close the existing $3.4 trillion global trade financial gap, which
disproportionately affects SMBs lacking robust financial records.

Cloud Computing

Optimized supply chain cloud platforms can be utilized to

R
create tools and mechanisms that connect various stakeholders -
such as importers, exporters, insurance providers, and transport
carriers - to enhance communication within the ecosystem. This
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integration ensures that processes are standardized globally,
facilitating smooter interactions and collaboration among all
parties involved.

Tech-Based Logistics

Smart packaging solutions enhance product tracking and

T

provide critical warehouse information for delivery partners and

shippers, addressing the growing demand for security and safety
during transit. Additionally, these initiatives can help companies
NO

boost sales and cut costs by streamlining key logistics

process, minimizing theft, and effectively managing
waste.

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Case Study: The Impact of Technology on the Global Supply Chain

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Technology has had a transformative impact on the global supply chain,
reshaping operations and the flow of goods from production to consumption. One
of the major effects is the enhanced speed and efficiency in communication and
data exchange, with tools like the Internet, cloud computing, and real-time
tracking systems enabling businesses to collaborate seamlessly with suppliers,
manufacturers, and customers. This connectivity allows rapid responses to market
changes and customer needs.
R
Automation and robotics have also significantly impacted manufacturing
and distribution. With advanced robotics and AI, production processes are
streamlined, labor costs are reduced, and product quality is enhanced. The rise of
FO
"smart” factories, connected to the Internet of Things (IoT), has further optimized
production and supply chain activities.
Additionally, technology has paved the way for new supply chain models
like "just-in-time” and “lean” manufacturing, which focus on minimizing waste and
cutting costs. These models utilize real-time data and analytics to manage
inventory efficiency and optimize logistics for faster, more cost-effective delivery.
Finally, technology has enabled businesses to monitor every stage of the
T

supply chain, from raw materials to finished products. This real-time tracking
improves transparency and traceability, helping businesses quickly address delays,
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quality issues, and bottlenecks. With growing consumer and regulatory

attention on sustainability, ethical sourcing, and product safety, such
visibility has become increasingly vital for modern supply chains.

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Preparing for Future Challenges and Opportunities in International
Trade

Introduction

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The rapidly shifting global landscape is opening new doors and presenting
unique challenges for international business. Companies are drawn to global
markets to expand their reach, access new customers, and increase revenue, often
locating production overseas to benefit from lower labor costs and favorable tax
structures. Yet, the allure of international business comes with risks, as noted by
Reinhardt in Global Business. Economic fluctuations, ongoing geopolitical
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tensions, and changing trade networks all impact companies that operate
globally. Each country's unique regulations, culture, languages, currencies, and
inflation rates add to the complexity, requiring businesses to be adaptable and
FO
responsive. (Cote, 2020; Husseiny, 2023).

Challenges in International Business and Trade

Initial Investment

Adopting advanced technologies like AI, blockchain, and

automation in international trade can require significant
upfront costs for acquiring technology, software, and
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infrastructure. Small and medium-sized enterprises (SMEs), in

particular, may struggle to allocate resources due to tighter
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budgets. Although the initial cost may be high, this

investment can yield long-term benefits for business
growth and efficiency.

Skills and Training

To fully leverage advanced technology, com-

panies need skilled personnel who can effectively

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Trade

Challenges in International Business and Trade

SA
Skills and Training

manage and utilize these tools. This requires investment not

only in technology but also in employee training and
upskilling, which may involve rethinking hiring practices and
creating continuous professional development programs.
RTransitioning to a more tech-savvy workforce can be time-
consuming and may require adjustments to existing business
processes.
FO
Regulatory and Security Compliance

Implementing technologies in international trade must

align with complex regulatory frameworks and trade
agreements. Non-compliance with international trade laws
can lead to legal issues and damage a company's reputation.
Additionally, as cyber threats increase, businesses must invest
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in strong cybersecurity measures to protect sensitive data and

maintain the trust of international partners and customers.
NO

Language Barriers

Expanding into new international markets

requires careful consideration of language diffe-
rencess. Product messaging may need adaptation
to avoid misunderstandings, as seen in the case of
Mercendes-Benz in China, where a mistranslation

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Preparing for Future Challenges and Opportunities in International
Trade

Challenges in International Business and Trade

SA
Language Barriers

required a rebranding. Language challenges also affect team

communication in international offices, where interpreters
may be needed to ensure smooth operations.
RCultural Differences

Each market has distinct cultural norms and values,

which can affect how businesses operate. Understanding and
FO
respecting cultural differences, such as work hours or
communication styles, is crucial for successful global
interactions. For example, work hours in Spain differ
significantly from those in the U.S., reflecting local customs
like the midday siesta.

Managing Global Teams

T

Managing a dispersed team across various time zones,

languages, and cultures can be challenging. Regular check-
ins via video conferencing can help bridge these gaps and
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build team cohesion. Research indicates that fre-

quent communication between managers and remote
employees leads to higher engagement levels.

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Challenges in International Business and Trade

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Currency Exchange and Inflation Rates

Navigating fluctuating currency exchange rates and

inflation levels is essential for international trade. Exchange
rates between countries can vary, directly impacting pricing
and costs. Monitoring inflation rates helps businesses
R understand local economic conditions
changes in material and labor costs over time.
and anticipate

Foreign Politics, Policy, and Relations

FO
International Business in influenced by political
decisions, policies, and relations between countries. Changes
in trade policies, tariffs, or subsidies can affect the costs and
availability of goods and services across borders. For instance,
government subsidies for local industries can impact markets
in neighboring countries, requiring businesses to stay
T

informed and strategically adapt to these shifts.

Preparing for International Business Challenges

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When planning to expand your business globally, it's essential to

be prepared for the unique challenges of international markets. Yet,
these challenges also present substantial growth opportunities. To navi-
gate them effectively, diversify your sources of international news, stay
updated on foreign political developments, build networks in target
countries, invest in language support like interpreters and consider
enrolling in a global business course.

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Trade

Opportunities for International Business and Trade

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Despite the challenges, businesses that effectively integrate technology into
their global expansion strategies can unlock substantial benefits: (Husseiny, 2023):

Boosted Efficienncy

Leveraging automation and AI can greatly streamline

business operations. Routine tasks can be automated, while AI
Rcan provide valuable data analysis and support decision-
making, reducing errors, boosting productivity, and lowering
operational costs. This increase in efficiency not only saves
FO
money but also strengthens a company's position in the
global marketplace, enabling faster responses to market
demands and more accurate product delivery.

Enhanced Decision-Making

AI offers data-driven insights that are invaluable in

international trade, helping businesses predict market trends,
T

optimize supply chains, and forecast demand. In a dynamic

global market, having reliable data to guide decisions is
essential. By utilizing AI's insights, businesses can adapt more
NO

effectively to market shifts, proactively adjust their

strategies, and maintain a competitive edge.

Greater Trust and Transparency

Blockchain technology ensures a secure,

transparent record of transactions, boosting trust

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Greater Trust and Transparency

and transparency in international dealings. This feature can be

particularly appealing to businesses aiming to establish
strong, lasting relationships with global partners and
customers. Blockchain's traceability allows stakeholders to
R verify product origins and integrity, building trust and
positioning companies as committed to ethical and
transparent practices.
FO
Expansion into New Markets

Technology facilitates international growth by enabling

faster, more accurate transactions and reducing the risk of
operational errors. Automation and digital tools make its
easier for companies to confidently enter new markets and
extend their reach globally. As a result, businesses can attract
T

a larger, international audience, seizing opportunities

worldwide and positioning themselves as global leaders.

Several Key Trends Influencing the Future of International Trade

NO

According to Garay (2023), international trade remains a crucial

engine for economic growth and development, linking countries,
businesses, and consumers through the flow of goods, services, and
data. However, with the global trade environment undergoing
substantial transformations, both challenges and new opportunities
are emerging for the future.

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Several Key Trends Influencing the Future of International Trade

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Trend 1: DIGITALIZATION

Digital technology, including the Internet of Things, AI,

3D printing, and blockchain, is increasingly transforming
international trade. These technologies are not only reducing
trade costs but also improving efficiency and quality, as well
R as enabling new products and services. According to the
WTO's 2018 World Trade Report, digital technologies have the
potential to increase global trade by up to 34% by 2030,
FO
particularly in services. Digitalization is also shifting trade
dynamics, with a higher share of services, more time-sensitive
products, and altered global value chains. However,
challenges like privacy, security; digital inequalities, regulatory
inconsistencies, and potential labor market disruption must
be addressed to ensure that digital trade is inclusive and
sustainable.
T

Trend 2: REGIONALIZATION

A shift from global to regional value chains is becoming

NO

apparent, with a growing share of trade and pro-

duction occurring within regions rather than globally.
Factors such as rising demand in emerging markets,
expanded production capabilities in developing
countries, new localization technologies, and incre-
sing trade tensions are driving this trend. The
Mckinsey Global Institute (MGI) reports a decrease

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Trend 2: REGIONALIZATION

in trade intensity across nearly all production value chains

since 2007 and estimates that regional trade could account
for about 70% of merchandise flows by 2030. While
regionalization can reduce transport costs, increase resilience,
R and foster local business growth, it also poses challenges by
potentially reducing global efficiency, increasing regional
disparities, and weakening global trade institutions.
FO
Trend 3: SUSTAINABILITY

The demand for sustainable trade practices is growing,

as consumers, businesses, and governments prioritize
reducing the environmental and social impacts of trade.
Factors driving this shift include heightened awareness of
climate change, consumer preferences for greener products,
and evolving regulations on environmental and social
T

standards. Standard Chartered forecasts that by 2030,

sustainable goods could comprise 25% of global trade,,
NO

supported by $1.5 trillion annually in sustainable

finance, with supply chains potentially achieving $320
billion in annual savings.. While sustainability can
enhance environmental and social outcomes and
create new markets, it also introduces compliance
costs and risks, trade disruptions, and the need for
businesses model adjustments.

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CHAPTER QUIZ - CHAPTER 7

MAKE SURE YOU HAVE A STABLE INTERNET CONNECTION WHEN ANSWERING

SA
THE QUIZ. YOU CAN ONLY ANSWER THE QUIZ ONCE. DURATION: 30 MINS.

Open your Google Classroom. Select classwork then click IBT - Chapter 7 Quiz.
Open the classwork and answer the quiz. Follow the instructions stipulated. You
may answer as many as you can. Once done, click the 'Mark as Done’ button on
the classwork for it to be recorded.
R
GROUP ACTIVITY 1

Divide your class into four (4) groups. Interview a trading/ logistics company
FO
that uses advanced technologies (AI, blockchain, Internet of Things) to optimize
their supply chain, enhance trade logistics, or enter new markets and write a
narrative report about it.

When you're done, please attach a link of your work in view copy in Google
Docs format on your Google Classroom. Each of you should upload the file.
T

GROUP ACTIVITY 2

With your same group, develop five (5) innovative solutions to

NO

enhance trade logistics in the future of the trade/ logistics company

you interviewed using the provided template. Click here

When you're done, please attach a link of your work in view copy
in Google Docs format on your Google Classroom. Each of you
should upload the file.

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SCORING RUBRICS FOR THE INDIVIDUAL AND GROUP ACTIVITIES

SA
R
FO
T
NO

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REFERENCES

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SA
-of-technological-advancements-on-international-trade-and-finance/ on
November 2, 2024
Bekkers, et al. (2024). The impact of digital technologies on developing counttries’
trade. Retrieved from https://www.wto.org/english/res_e
/booksp_e/05_adtera_chapter_01_e.pdf on November 2, 2024.
Cote, C. (2020). 5 Common Challenges of International Business You Should
Consider. Retrieved from https://online.hbs.edu/blog/post/
challenges-of-international-business on November 6, 2024.
Garay, D. (2023). The Future of International Trade: Challenges and Opportunities.
R
Retrieved from https://www.linkedin.com/pulse/future-international
-trade-challenges-opportunities-abate-garay/ on November 6, 2024.

Hussseiny, N. (2023). Challenges and Opportunities in International Trade:

Exploring How Technology is Transforming International Commerce.
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FO
opportunities-in-international-trade-exploring-how-technology-is-
transforming-international-commerce/ on November 6, 2024.
Mukewar, P. & Forbes Finance Council. (2022). How Technology Can Help Global
Trade Become More Efficient, Inclusive And Equitable.
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2022/09/02/how-technology-can-help-global-trade-become-more-efficient-
inclusive-and-equitable/ on November 2, 2024.
Ospina, E., Beltekian, D., & Roser, M. 2024) Trade and Globalization. Retrieved from
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Statista. com (2024). Retrieved from
T

https://www.statista.com/markets/423/topic/534/international-trade/
#overview on October 27, 2024
NO

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REFERENCES

UNCTAD (2024). Global Trade Update (March 2024). Retrieved from https://unctad
.org/publication/global-trade-update-march-2024 on October 27, 2025

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U.S. News (2027). International Trade. Retrieved from
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2024.
Welch, E. (2023). How Technology Affects International Trade. Retrieved from
https://www.entrepreneur.com/en-ae/growth-strategies/how-technology
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%20multiple,resulting%20in%20increased%20volumes%2C%20and
on November 2, 2024.
World Economic Forum. (2024). TradeTech is revolutionizing global trade.
R
https://www.weforum.org/impact/revolutionizing-global-trade-through-
technological-transformation/ on November 2, 2024

World Economic Forum. (2020). Top Ten Technologies That Will Change
International Trade, Released by World Economic Forum. Retrieved
from https://www.weforum.org/press/2020/12/top-ten-technologies
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-that-will-change-international-trade-released-by-world-economic-forum/
on November 2, 2024.
World Trade Organization. (WTO). Global goods trade on track for gradual recovery
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english/news_e/news24_e/stat_10oct24_e.htm on October 27, 2024.
World Trade Report (2018). How digital technologies are transforming global
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Xiong, T. (2023). The effect of technological intensity on international trade.
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