Openess Trade and Growth Essay

The concept of free trade has been debated throughout the ages and continues to stir emotion, as the title of Douglas Irwin’s book: Free Trade Under Fire. Douglas A. Irwin (born in 1962) is not only a businessman, but also is an American economist. But compared to other economists, he is exception stood out with clear and jargon-free English writing style. And in this book, Irwin has provided an informative, comprehensive and easy-to-read explanation of the benefits of a liberal international trading, help people who are deceived of the accusations against open markets have more information and knowledge to evaluate the issue more precise.

Many indicators serve to measure the degree of trade openness. The first is designed to assess directly the level of economy openness to foreign trade. The degree of openness measures the level of the external constraint and it is obtained by the ratio of the value of foreign trade on the GDP. The second indicator (distortion) aims to measure the impacts of protectionist policies of a country.

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 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

Those economically disadvantaged (poor) within a country generally gain from a loose trade. A loose trade is generally a strong positive contributor to poverty reduction. This allows people to exploit their productive potential, assists economic growth, restrains illogical policy interventions and helps to insulate against shocks. This corresponds with a new World Bank study which, used data from 80 countries over four decades, confirmed that openness boosts economic growth and that the incomes of the poor rose one-for-one with overall growth.

“Trade freedom reflects an economy’s openness to the import of goods and services from around the world and the citizen’s ability to interact freely as buyer or seller in the international marketplace” (Miller and Kim, 2011). Tariffs, export taxes, trade quotas, trade bans, and other trade restrictions all hinder the free flow of foreign and domestic commerce. Tariffs and export taxes increase prices to both

Both the traditional free trade version and new international trade theories failed address the dynamic implication of trade opening in terms of economic development and growth of the training partners, especially so for the developing countries. Unrealistic classical and more realistic new version of trade theories failed to address the issue of economic development and growth which include, “viewing change by comparing static equilibrium states, rather than as a process occurring in historical irreversible time (Bhattacharjea

International trade theories explain international trade patterns. Academics see trade as the interdependence of states through the exchange of capital, goods, and services. International trade has existed for thousands of years in the world. Its economic, political and social influence in the world has begun rise. However, new trade theories include Porter 's diamond national competitive advantage which focuses on modern trade concept. This paper will discuss Porter 's diamond national competitive advantage and the extent to which their link to the new trade theories contrast with the neoclassical view of trade. The author will then discuss how government policies could influence trade pattern.

Trade plays a key role in stimulating economies. It promotes sustainable economic growth and development. However, for this to happen there needs to be openness. This paper is going to discuss how increasing the level of openness of developing nations can lead to increased economic growth. The paper will also review some of the dynamic gains that can be made from trade before concluding with a discussion of the roles of global trade organizations in promoting economic development. These discussions will be supported with examples of nations that have excelled in the various aspects that will be discussed.

In the 1970’s and 1980’s trade openness and economics reform towards market mechanism flourished in many developing countries. This trend is much different as compared to those in the early 1950’s and 1960’s when many less developed countries favored protection policy, inward orientation, and import substitution. As a result of this change, there are substantial developments in world economy after applying outward orientation. According to Thilrwall (2011 p. 514), the implementation of trade openness has managed world output trade relative to world output gain a considerable growth in the period of 1960-2006. The volume of world trade has risen 25 times or nearly 8 percent per annum (at annual compound rate). In the meantime

Firstly, International trade is the trading of products and ventures crosswise over worldwide outskirts. It makes the economy to make utilization of the characteristic assets for the creation of merchandise and how it 's most appropriate. It has been discussed that international trade arises when a country specializes in the production of certain goods and thus it produces more than what is needed to supply the domestic demand and therefore it exports the surplus (Collings, 1929). Also, it empowers a nation to acquire products are not produced in the economy as it may be expensive by bringing in from different nations at lower costs. Another thing is that it increases efficiency due to the international competition, each producer tries to produce the better quality goods (Collings, 1929). On the other hand, international trade may have a negative

The level of economic openness in European countries is high. The average openness is approximately 40% in EU member states (Mongelli, 2002), and there is an increasing trend in openness level over time (Table 1). This result shows that, in general, the import and export growth rate exceed the growth rate of GDP in EU12 countries during these years. It should be mentioned that, in Table 2, the intra-regional trade in the EU plays a significant role, it accounts for about 60% of the international trade (Laabas & Limam, 2002).

(Krugman 1987,131) Free trade supporters make a point that if we don’t move toward liberalization, the gravity of protectionism and political interests will pull us back-“bicycle theory”. (Bergsten 1996, 109). The successful example of bicycle moving forward is the Uruguay Round conclusion. (Bergsten 1996, 109). Following that NAFTA and such, have made a significant progress in resolving debate in the international trade arena. Liberalist economists insist that with openness toward international trade, countries benefit in multiple segments and knowledge is one of the major exchanges which are crucial for improvement. ( O’Brien & Williams 2013,112) Therefore, it is important to understand liberalist perspective at first. Economic liberalist view human nature acting rational in order to maximize their self-interest. This theory strongly support the thought where individuals when acting rationally create markets which produce, distribute and consume goods function best free. This way international wealth is maximized with exchange of goods and services which is also a comparative advantage based theoretical aspect. (Mingst &Toft, 2104, 310) With Ricardo’s comparative advantage, it’s important to mention specialization of a commodity that a specific country can produce more efficiently in exchange for another commodity.

Trade is generally known as the buying and selling of goods from one person to another, “international trade would involve at minimum two countries and can go up to however many want to participate in the trade”1 and have something to offer that the there corresponding countries are willing to accept. Trade involves a lot of protection backed by the governments of the countries trading; hence, there are a number of common arguments in favor of protection. These may help certain groups within a country, or even may help a nation achieve some overall goal entirely. When it comes to trade there are numerous arguments put forward, some of which I will be discussing in this paper such as government

Despite the clamor of the classical economists about the advantages of the free trade, the policy has either not been adopted by many countries or abandoned by those who had already adopted it. Economic history indicates that for the last two centuries, international trade has developed with