Cross border trade

Cross border trade
See also

Cross-border trade this is the process of selling or buying goods and services between companies located in neighbouring countries. In the relationship, the buyer is in another neighbouring country and the seller is in another neighbouring country again. This password is strongly associated with cross-border payment. This is because, once two countries have a different currency, they have to make a cross-border payment in order to carry out the transaction correctly. Nevertheless, such action generates a risk of exchange rate fluctuations for at least one of the parties. For example: an entity based in Poland sells goods to an entity based in Slovakia.

Cross-border trade in e-commerce

In the era of digitization, the concept of cross-border trade has expanded considerably. As more and more enterprises started to implement the Internet in their business solutions, the e-commerce trade became more and more common (and thus the international dimension of such sales). However, despite the existence of such a system for more than a decade, it still faces many problems. First of all, the issue of cross-border payments and the associated costs is important. Very often, buyers cannot use the services of another entity, as it provides services in a country whose foreign exchange fees are too high to establish a business relationship with it [1].

Traditional cross-border

In a situation where digitization has taken over most of the international trade, it is easier to provide services across borders. However, traditional cross-border trade is still alive. This is due to the fact that countries still carry out the typical transport of goods between borders. This is particularly popular in companies that focus on heavy-duty thinking, such as fuel, steel and power generation [2].

Cross-border trade in tourism

In view of the frequent changes in the political and administrative borders of neighboring countries, it can be observed that there are very often similarities between neighboring countries:

  • Social
  • Cultural
  • Historical

With this in mind, so-called economic and political cross-border collaboration is being created, which aims to regionalization specific social and cultural dimensions. As indicated in the literature, they are successful in a situation where there is little interference of central state offices in the creation of such centers [3]. Cross-border trade in tourism has a positive impact on the development of the globalisation process. Through the rapid movement of goods that are specific to a given region, it is more likely that the citizens of that country will visit that region. In addition, the establishment of foreign branches of travel agencies by associated countries makes it possible to conclude tourism service contracts at the place of residence of the potential tourist. It is worth mentioning that the aim of cross-border trade is to create cross-border cooperation in Europe, which will integrate divided nations facing the same problems. Particular attention is paid to the benefits that can be derived from the implementation of such solutions [4].

Footnotes

  1. Gomez-Herra, E., Martens B., Turlea G. (2014), p. 8-10
  2. WTO Report, (2017), p. 84-88
  3. Weidenfeld, A., (2013), p. 5-8
  4. Perelli, F., (2009-2010), p. 48-49

References

Author: Melania Mazur