Importance Of Trade And Economic Growth Of Developing Nations

The United States has an absolute advantage over the technological products and services which are critical. Within the global markets, the U.S has been able to provide tech products and services appropriately. However, it has comparative advantage of offering tech services while the absolute advantage exists in technology design and providing industrial capacity. The U.S is a major exporter in the international markets of products such as civilian aircraft, semiconductors, cars, car accessories, fuel oil, and organic chemicals among others. Such exports improve the U.S's comparative and absolute advantage.

Not all aspects of economic growth are positive, for example when an economy is at, or near its full capacity of productivity prices can be driven up causing inflation and the devaluing of their currency, where each unit of currency buys fewer goods and services that it previously could have. It can increase the

Free trade provides opportunity, it provides growth, and it provides struggling nations a chance. With free trade, markets open across national borders and the consumer ultimately benefits from higher quality goods at fair market prices. The producers of such goods now have larger markets to sell to allowing for the opportunity at increased sales, giving the consumer a greater variety of goods that can more individually meet specific demands. Free trade implementation to the United States foreign policy is a developing and revolutionary mindset that will bring prosperity to all parties involved. The United States will benefit from free trade because the market to purchase U.S. made goods and services will increase dramatically

Potential growth – Potential growth is the increase in an economy’s productivity potential; the growth in the long run.

For example, the economic and trade development between the United States and ASEAN will first boost the economic development of ASEAN. With the continuous strengthening of economic and trade cooperation between China and ASEAN, China's economy will also develop continuously. Chinese enterprises are now actively participating in the process of economic globalization through outward FDI. In these countries that have signed free trade agreements with the United States, Chinese enterprises can make good use of favorable local resources and other factors of production to make investments and continuously upgrade their businesses. Own capital and competitiveness, and improve the position of Chinese enterprises in the world.

The free trade agreement will affect both countries in a positive and negative way. The free trade agreement will affect both economics. The free trade agreement is said to be a big part of both countries history. The free trade agreement is said to bring in tourist from both. The residents of China are very happy with the free trade agreement.

For instance, negotiators are working to set up rules on intellectual property rights, government procurement and the role of the state in private enterprise.” (LA times) The agreement spans more than 10 countries including the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Canada, Peru, Singapore, Vietnam, Japan, Korea, and of course Mexico. The combined value of these countries represents almost 25 percent of the world’s trade and 45 percent of the world’s GDP (DePilis). Mexico has a lot to benefit by joining such a large free-trade pact and it isn‘t just the economic gains a US$180 billion TPP market.”(east asia). The benefits will not only be in monetary value but also in exposure to new markets all around the globe, which lead to benefits in many different areas “It will allow them be present in the Asia-Pacific region with preferential access to a market representing a potential market of 198 million consumers, without including NAFTA countries. It is an agreement that not only opens markets for them, but also will create long-term synergies and additional benefits such as taking advantage of the economic cycles of Australia, Singapore, Malaysia and Vietnam which are in turn related with the economies of China and India. There are studies that predict that the economic benefits of this integration could be reflected by

By granting China most-favored-nation trade status the United States has started that long and difficult process of bringing China out of its international dark ages. In order to live up to the terms of most-favored-nation trade status China has had to become more open to social and economic changes. These reforms included more economic freedom, easier access for foreign direct investments. The economic developments these reforms have been to a main cause for China’s newly increased gross nation product. Over a ten-year period from 1978 to 1988 most-favored-nation trade status was directly responsible for an annual ten percent growth in China’s gross national product.

“South to South” trade, meaning trade between developing countries, accounts for 40 percent of all goods flow. The expansion of trade into these new regions is by reason of technological advances and economic growth and increasing numbers of consumers.

Trade is an engine of growth; it has many effects and benefits that can help to grow the economy on a global scale. The benefits of trade can be viewed in different perspectives depending on the view that is taken the benefits and the receivers change. Trade can be viewed from the perspective of the economic nationalist, which argues that protectionism is a need to help grow the states economy and power. While in another approach trade can be seen as positive sum game by the means of comparative advantage through the lens of liberalism. Lastly there are some that argue that specialization of goods is a way to increase productivity and economic growth. The focus of my paper will be to present these perspectives on and suggest

The theory of comparative advantage explains the benefit of free trade. According to this theory by David Ricardo in the early 19th century, “Both countries will be better off if each specializes in the industry where it has a comparative advantage, and if the two trade with one another.” (Citation) International trade opens up markets to foreign supplier, and domestic companies need to improve their efficiency, boost productivity, and lower cost to increase competitiveness instead of enjoying monopolies or oligopolies that enabled them to keep prices well above marginal costs. On the other hand, international trade also offers domestic companies bigger demands and broader markets; therefore more jobs relevant to export have been created. Furthermore, jobs in the US supported by goods exports pay 13-18 percent more than the US national average (ustr.gov).

The numerous trade agreements developed between different groups of countries reveal the success of developing such relationships. Countries these trade agreements have reported increased imports and

This paper aims to determine the benefits and consequences for Brazil in signing a free trade agreement (FTA) with the United States through examining the problems in the bilateral relation. Before going deeper into the specific situation between trade relations between both countries, it is vital to understand why free trade matters. The topic of free trade has been an ongoing and growing discussion over the last decades. With the rapid growth of globalization, this topic is relevant in the majority of countries around the world. Because of this, trade is a pertinent issue, particularly in major economic powers as both Brazil and the United States are. The purpose of this chapter is to explain the theory of trade and the benefits and consequences that it provides countries that have open markets To do this, I will describe the theory of comparative advantage, the Heckscher–Ohlin (H-O) model which provides a theory on the gains and benefits of trade as well as the distributive effects that trade has on the income of individuals in each country.

In this study, panel data for 25 developing countries is used for the years 2000, 2005 and 2010. These countries are listed separately in appendix ‘A’. The World Bank list of developing countries was referred to but data for these three particular years was available for 25 out of 145 countries. All the variables that were used in our model were sourced from the World Bank’s World Development Indicators 2013. The description of variables is given in appendix ‘B’.The descriptive statistics of the variables are presented in appendices ‘C’ and ‘D’.

The growth of international economy is significantly being driven by trade liberalization. The concept of free trade was firstly presented by Francisco de Vitoria in 16th century (Nussbaum, 1947). Then two early economists Adam Smith and David Ricardo proposed the concept of liberalization trade and applied the theory to practice. Since the end of World War II, the United Sates devoted itself into reducing tariff-barriers and free trade. As a result, the United States led the establishment of the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) (World Trade Organization, 1997). FTAs as a tool of trade liberalization can effectively utilize resource allocation, stimulate competition and increase capital