What are push factors in the context of international trade?

Push factors such as saturated domestic markets and competition, pull factors such as economies of scale and risk spreading, and off-shoring and outsourcing.

What you need to know

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Key term

Which push factors drive a business to trade abroad?

Key term

Which pull factors attract a business overseas, and what is off-shoring?

Key term

What is the distinction between off-shoring and outsourcing?

Questions from this subtopic

Each one with the model answer underneath.

1
What are push factors in the context of international trade?
Model answer
Conditions in the domestic market that encourage a business to seek international trade opportunities.
2
Define a saturated market.
Model answer
A market where demand for a product has reached its maximum in the domestic market, leaving little room for growth.
3
Explain how market saturation acts as a push factor for international trade.
Model answer
When domestic demand is maximised, businesses are forced to seek new customers in foreign markets where demand for their product still exists.
4
Why does intense domestic competition act as a push factor?
Model answer
It reduces profit margins and market share, prompting businesses to expand internationally to find less competitive markets.
5
A business finds its domestic market share declining due to new competitors. What type of factor is this, and what response might it prompt?
Model answer
This is a push factor; it may prompt the business to expand internationally to find markets with less competition.
6
What are pull factors in international trade?
Model answer
Attractive conditions in foreign markets that draw businesses towards international trade.

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