Developed nations trumpet the claim that the answer to developing nations’ international trade issues is untrammeled or open market activity as opposed to government intervention by developed nations’ governments. This begs the question as to what extent the governments of developed nations are or should be responsible for supporting developing countries’ growth in international trading markets. Often the protectionist actions of developed nations’ governments to enhance their own international trading activities are the very hindrances faced by the developing countries, so much so that the developed nations are morally obligated to support the developing countries to offset the roadblocks created by these same developed countries with tariffs, quotas and other trade barriers.
Trade Problems of Developing Nations
Developing nations’ trade efforts are largely hampered by their reliance on primary products for export, such agricultural goods, raw materials, and fuels (Carbaugh, 2011). The few manufactured goods exported by developing nations are generally limited to labor intensive products, such as textiles and clothing, with little technology-driven production. In order to develop international trade, developing nations often must displace the lowest rung of goods and workers in the developed nations, who in turn seek import trade protection from their own governments. This becomes the issue of developed nations “helping their own poor versus helping the world’s poor”
There is no doubt that increasing in international trade is supporting the economic growth across the world, raising incomes and creating jobs. However, international trade can also some create economic obstacles, such as the international context and the market policy and regulations of each country, and consequently it can be said that the effects would have positive and negative sides, and it is useful to mention all of them and to take them into consideration.
Following World War II, economic policies were marked by two major trends. On one hand, industrialized economies gradually removed trade barriers. These policies were based on the idea that free trade is not only a factor for economic prosperity of nations, but also for the promotion of peace. On the other hand, economic policies of many developing countries with the exception of few countries in Southeast Asia have been conditioned by the belief that the key to development rests in the establishment of a powerful manufacturing sector, and that the best way to create such an area was to protect local industries from international competition through substitution imports policies.
This is because many developed countries may use protectionist measures to prevent developing countries from having free access to certain markets (which may include the markets for the developing countries’ primary product) thus making it more difficult for poorer countries to grow and develop.
Poverty, the state of being extremely poor, affects a large proportion of the global population who are unable to access adequate levels of food, shelter, healthcare and education. Therefore, it is reasonable to assume that reducing poverty is considered to be a net positive without addressing the concept from a variety of theoretical lenses. The World Bank quantitatively defines those living in poverty as individuals with less than “$US1.90 PPP (Purchasing Power Parity) per person, per day”, by these metrics global poverty has decreased significantly, from approximately 44 percent of the global population in 1981 to an estimated 9.6 percent in 2015 (WB PovcalNet, 2016). Although this is an impressive improvement there are still many people living in poverty around the world. This essay will examine some of the methods used to combat poverty, as well as how it has changed over time. These methods include both free trade, fair trade and their alleged opposition to each other as well as comparing domestic and foreign aid.
Global poverty ends when the local economy is able to trade its way into an improved future. The most significant alleviations of poverty have been seen in those countries that have been able to create and trade goods. By building an industry and joining the global market, an impoverished country can generate revenue to in turn be reinvested into the local economy. The current policies in place limit the potential of poor countries to join this market and improve themselves. Reforming trade negotiation and the limitations placed on the market will allow these smaller countries to create their own sources of income.
One of the greatest international economic debates of all time has been the issue of free trade versus protectionism. Proponents of free trade believe in opening the global market, with as few restrictions on trade as possible. Proponents of protectionism believe in concentrating on the welfare of the domestic economy by limiting the open-market policy of the United States. However, what effects does this policy have for the international market and the other respective countries in this market? The question is not as complex as it may seem. Both sides have strong opinions representing their respective viewpoints, and even the population of the United States is divided when it comes to taking a stand in
Free trade has long be seen by economists as being essential in promoting effective use of natural resources, employment, reduction of poverty and diversity of products for consumers. But the concept of free trade has had many barriers to over come. Including government practices by developed countries, under public and corporate pressures, to protect domestic firms from cheap foreign products. But as history has shown us time and time again is that protectionist measures imposed by governments has almost always had negative effects on the local and world economies. These protectionist measures also hurt developing countries trying to inter into the international trade markets.
A lot has changed in the world economic scenario over the past 25 years. World trade has increased from $8.7 trillion in 1990 to over $46 trillion in 2014 (Global Economic Prospects 2016: 219). These numbers reflect a growth in the trade of goods and services amongst different nations, which came as a result of globalization. With that being said, an economic interdependence has been formed. Countries that have been actively participating in this phenomenon by joining trade agreements, eliminating tariffs, and facilitating commerce have highly benefited from this transformation. On the other hand, nations that have isolated themselves from these opportunities through protectionist policies, have been negatively impacted. Members involved in these trading blocs gain a competitive edge over those who opted to stay out. Brazil serves as a good example of the negative effects that adapting a protectionist policy may have on a nation 's economy. The country has access to a vast amount of primary resources, including soy beans, oil, sugar cane, iron ore, coffee, and orange juice. Nonetheless, its exports account for a mere 11.2% of its GDP, in comparison to the world average, which in 2015, amounted for a total of 29.3% (World Bank Group, 2016). One of the main reasons for the disparity between these numbers is given by the lack of free trade in the government 's foreign policies. This paper will closely examine two trade agreements in an effort to compare and contrast the
Occasionally both tariffs (tax that adds to the cost of imported goods) and import quotas (a restriction placed on the quantity of particular good that a country can import) are used to control the quantity of foreign products that can enter a country’s domestic markets. Several arguments have been raised regarding reasons for protecting domestic markets against foreign traders. Nonetheless, protectionism is characterized by several welfare consequences. The arguments for protectionism can be categorized into economic and non-economic. The economic arguments mostly focus on national welfare. On the other hand, arguments for non-economic protectionism are based on national interests. This paper evaluates the potential justifications for protectionism measures.
Foreign trade has been a widely debated issue across the developing world. In the last 30 years, a number of developing countries increased their openness to foreign trade. World trade as a percentage of world output has increased 1.46 times between 1980 and 2003.These years witnessed an integration of individual economies into a globalized economy, which has been beneficial for the participating countries in many ways. This integration includes the flow of capital across countries in addition to the traditional trade in goods and services. In this piece, we focus on trade in goods and services between nations. We study the effects of trade on poverty. While the many advantages of trade liberalization have been widely
For years developing countries have been striving to become a better country for their people, but neoliberal institutions hold back developing countries, and also force them to partake in hurtful policies. Developing countries have been searching for more pragmatic policies that account for interests in markets societies and states. The world should put into account the disadvantage developing countries have as they don’t have the same technology and advancements as the rest of the world does so they should be aided even more in their development. Neo-mercantilists policies like the World Trade Organization say they strive to help developing countries but in the end these organizations do more harm than good. Developing countries have high interests in catching up to world leading countries but are naturally out into world constraints because of their stake in the world.
Stiglitz, a recipient of the Nobel Prize in Economics, and Andrew Charlton, a fellow economist, propose a new, radical solution to world trade problems – a solution that brings equilibrium to the trading relationships between the poorest and richest countries. The book contains an in-depth, college level understanding of fair trade and its theoretical applications on third world countries. With regards to theoretical applications, the book elaborates on the proposal, which is fair trade, and how it can initiate development in a country. Besides providing a holistic and substantive perspective on fair trade, the book also expounds on the effects of globalization on world trade and the development of third world countries. The book is useful to the study, as it will provide a clearer and better understanding of fair trade and support the arguments in the study. The main limitation of the study is that the book covers a wide area – fair trade, world trade, and third world countries, without going in-depth to labor rights abuse.
Many developing nations tend to try manufacturing as a way to become active in the international trade market. These nations offer cheap labor to companies. This cheap labor tends to give some of the population a better life and a way to provide for their families. Issues that arise in developing countries is that if the demand for commodities is low and the changes in price do not bring a change in demand, then prices can fall sharply. When prices fall, so does revenue. If companies are not making money, they may move out of the country to another area.
The international trade of goods across the world accounts for approximately 60% of the world Gross Domestic Product (The World Bank, 2014). A great proportion of goods transactions occur every second. The primary question is whether international trade benefits a country as an entirety, and, if so, why would a country implement protective trade policies to restrict particular exports? To address this question, this essay aims to explore the impact of trade on various economic stakeholders, including consumers, producers, labour and government and, furthermore, will compare models and theories with reality to ascertain the true winner/ loser in the international trade market.
If I were the advisor to a government of a small developing country, I would advise that said country to take caution when attempting to integrate into the world economy. Simply put, it seems that smaller developing countries should open their borders slowly and selectively. The concepts of “free trade” may seem enticing, particularly for a developing country based on the rhetoric demonstrated by organizations such as the World Bank for example. Hunter-Wade suggests that the general consensus surrounding trade liberalization is largely based on assumptions that in order to achieve further development, trade liberalization is entirely necessary (Hunter-Wade 2005). Moreover, Hunter-Wade claims that there’s also an accord on trade liberalization that infers that developing countries would benefit economically in the event that they reduced trade barriers. It’s further suggested that developing countries would also collectively experience economic gains in the event that rich countries were to remove barriers to their exports (Hunter-Wade 2005). When these types of ideas are widely dispersed and agreed upon, it can be difficult for smaller developing countries to reject such claims.