The paper "External Finance in Small and Medium-Sized Enterprises" is a great example of an essay on business. Small and medium-sized enterprises (SMEs) are a growing and dynamic sector in the UK economy and are likely to greatly contribute to its future economic growth. SMEs have a significant role in productivity growth of the UK economy as it stimulates fierce competition and innovation in the market. At the beginning of 2011, the number of SMEs was about 4.5 million representing about 99.9 per cent of the businesses. It also accounted for almost 50 per cent of the private sector turnover and 60 per cent of the employment generated by the private sector (HSBC, “ SMEs continue important drive to international shores” ).
Studies advocate that it is in the best interest of the SMEs in the UK if they are able to trade internationally as it will improve their market share as well as have a positive impact on position of the balance of payments of the UK. International Trade The exchange of goods, services and capital across international borders in order to expand the market and facilitate trade is known as international trade.
A significant portion of a country’ s Gross Domestic Product (GDP) comes from international trade. However, in order to carry out the trading operations in a structured manner, there needs to be a certain level of peace and stability prevailing in between the two countries involved. The international trade can be explained by the help of three models. Adam Smith’ s Model - Adam Smith, who is considered as the founder of modern economics, had argued in favor of free trade. Stressing on the advantages associated with division of labor and absolute advantage, he proposed free trade and developed his theory of international trade.
According to Smith (4), “ The greatest improvement in the productive powers of labor, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labor” . Considerable amounts of quantitative and qualitative improvements are possible by dint of division of labor. Hence, there is increase in output, enhanced workers’ skills, rise in productivity and stimulation of technological development.
Consequently, economic growth is facilitated along with considerable rise in the national wealth.
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Desmet, Klaus and José Riera. “Ricardian Model.” eco.uc3m. Klaus Desmet and José Riera. No Date. Web. 21 July 2014.
Dornbusch, Stanley Fischer, et al. "Comparative advantage, trade, and payments in a Ricardian model with a continuum of goods." The American Economic Review 67.5 (1977): 823-839. Print
HSBC. “SMEs continue important drive to international shores.” HSBC.HSBC. 2012. Web. 21 July 2014.
Khan, Habibullah and Chua Chun Lin. “International Trade and Tourism: Evidence from Cointegration and Causality Tests by using Singapore Data.” Fama. No Publisher. No date. Web. 21 July 2014.
Ronald, Jones W. “Hecksher-Ohlin Trade Theory”. econ.rochester. No Publisher. No Date. Web. 21 July 2014.
Smith, Adam. "An Inquiry into the Nature and Causes of the Wealth of Nations." London: Methuen & Co., Ltd. 1776. Print
UNCTAD. “International Trade In Tourism-Related Services: Issues And Options For Developing Countries”. United Nations. United Nations. 1998. Web. 21 July 2014.