How Trade Policies Affect Economic Growth And Development

The economy of the world is changing all the time. We have had our ups and downs, but with the help of insights from economist, we have been able to sustain a decent economy. In Naked Economics, Wheelan discusses how a country can have a successful economy. He discusses why countries are poor and why some other countries are doing lavish things, like buying a cake for a dog. The reason behind it is because the richer countries are more productive and allocate resources and the poorer countries aren’t as efficient and don’t allocate resources. Wheelan also wrote about how Steve Jobs and Bill Gates became as rich as they are. They made huge investments in human capital to become rich. They became rich because they had a product that people were willing to give their money for. There are many problems in different economies and Wheelan explains why they are failing. Some economies suffer from a poorly ran government and others suffer from the lack of information. Trade is a positive thing, but there are people that discourage it because products are imported from outside of the United States.

"What is the major reason for the differences in economic prosperity in various areas of the world today?

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.

Trade liberalization inspires economic growth, and ensures sustainable prosperity for everyone. The reduction and removing of tariffs has made materialistic goods like food and clothes more available and affordable to countries that are developing and have low GDP per person. For example, the average Kenyan

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.

Trading is very important economic factor. Trade between different countries depends upon different factors. There are some factors due to which bilateral trade between two states is enhanced. On contrary, there are some factors which restrict or reduce the trade between two countries (Meyer, 2011). Factors which enhance trade include different cultural, political, geographic and economic aspects which are common between the 2 countries involved in bilateral trade with each other. While trade is reduced or restricted, if two countries are completely different culturally, politically, geographically and economically (Siegel, 2011). For example, trade between two countries, having common boarder, currency, per capita income et cetera, will be lot more high than those countries which do not share these factors common with each

Evidence also shows that free trade stimulates a chain of growth in the economy because as economy becomes better as an effect of free trade, spending in the market increases, increasing demand. This results

Free trade, the ever present driving force behind our national and world economy, is a trade policy embroiled in controversy. It is considered by most economists to be an almost perfect trade policy, barring a few negative effects. Free trade has been shown to increase production, output and income levels in an economy. However, there are many people that view free trade as destroyer of economies and a catalyst of poverty. Critics of free trade have pointed out that in the short-run, free trade causes a loss of jobs which in turn causes a rise in poverty levels. It is interesting to note that the argument for free trade and the argument against free trade are inverses of each other. Proponents of free trade see it as a tool to stimulate an economy while detractors see it as a policy which exacerbates poverty, causes dependency and reduces economic stability.

As a business owner the responsibilities are enormous and there is a ton of planning. Having a business I will be taking into consideration an extreme chance of globalization and trade in context. Now there will be tariffs, business and government now getting involved in my company one way or another. All of this brings to thought why the United States saves part of the economic policies and procedures. In this assignment I will be talking about the governmental effects on trade policies and how they are used in different businesses. Also included will be how doing business in other countries might influence company owners. Does NAFTA have any effect on automobile industries and the trade agreement?

Throughout the years, there has been a constant controversy over whether the World Trade Organization should enforce global free trade. The primary idea is to establish in which all are happy. Although there are many advocates for trade liberalization, as well as many who oppose. I believe free trade may be advantageous for both large and small-industrialized countries, but it does not favor the smaller developing countries needs primarily.

In the last century, incomes in the "less developed" (or euphemistically, the "developing") countries have fallen far behind those in the "developed" countries, both proportionately and absolutely. I estimate that from 1870 to 1990 the ratio of per capita incomes between the richest and the poorest countries increased by roughly a factor of five and that the difference in income between the richest country and all others has increased by an order of magnitude.1 This divergence is the result of the very different patterns in the long-run economic performance of two sets of countries. One set of countries—call them the "developed" or the "advanced capitalist" (Maddison, 1995) or the "high income OECD" (World Bank, 1995)—is easily, if awkwardly, identified as European countries and their offshoots plus Japan. Since 1870, the long-run growth rates of these countries have been rapid (by previous historical standards), their growth rates have been remarkably similar, and the poorer members of the group grew sufficiently faster to produce considerable convergence in absolute income levels. The other set of countries, called the "developing" or "less developed" or "nonindustrialized," can be easily, if still awkwardly, defined only as "the other set of countries," as they have nothing else in common. The growth rates of this set of countries have been, on average, slower than the richer countries, producing divergence in relative incomes. But amongst this set of countries there have

Ever since the first involvement of government in international trade, many people have posed their opinion about what the role of government should be in it. Different factors are involved when it comes to deciding what this should be. It impacts a lot of people, so in order to do that, trade policy must be properly defined, identify what the roles of government currently are, and their involvement in it, and then analyse what should be their role. Trade policy is how a country carries out trade with other countries (Commercial Policy, n.d). Even though a lot of people support government intervention in international trade, countries would benefit a lot more if the government removes protectionism and promotes free trade instead.

In his Wealth of Nations, Adam Smith proposes trade policies for national enrichment, but his suggestions may actually limit the earning potential of nations. Using examples such as the pin factory, Smith clearly demonstrates that dividing labor roles among people increases efficiency. The specialization of each member allows the aggregate wealth of a nation to increase because each member took home a part of a much greater quantity of products manufactured. By that logic, specialized manufacturing among nations should increase the aggregate wealth of all nations because they produce an even greater overall quantity of a good. In many industries, however, without the promise of maintaining superior profits, manufacturers will not devote the necessary capital needed for many important technological breakthroughs. These breakthroughs are often attributed to groups aiming to maximize profit with the expectation that intellectual property rights will be protected. Smith’s proposed deregulation of trade to enrich nations may actually be counter-productive in certain industries where research and development are motivated by sustained high profits.

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.

Government intervention in the trade process may be either economic or noneconomic in nature. [See Table 7.1.]