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Explain the demerits of international business.

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The dements of international business are:

1. Excessive Dependence on other countries: International business, by making a country concentrate on the production of only those goods for which it is best suited, makes a county depend on other-countries even for essential products. Such dependence creates serious difficulties for a country, especially in times of war when international business becomes impossible.

2. Foreign competition: International business gives rise to foreign competition to a country. Foreign competition may ruin domestic industries, especially small and cottage industries which are unable to face such competition.

3. One-side development: International business may lead to onesided development of a nation’s economy. Because of the specialisation resulting from international business, a country may develop a certain sector of her economy, neglecting other sectors. This dependence on one sector is not good for the overall growth of a country.

4. Balance of Payment Problem: International business may cause serious balance of payment problem. The balance payment problem may force a country to borrow from international sources. Huge foreign debt may impair a country’s capacity to import goods.

5. Import of Luxury and Other Unwanted Goods: International business may encourage the import of luxury and other unwanted goods which are not necessary for the masses. Such imports may ruin the economy of country.

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