Nowadays international trade is growing fast because of two main factors. Those factors include trade liberalization and technological progress. There are many and different arguments about the effects of trade liberalization and outsourcing. But the net effect of international trade is of cause differs from place to place.
This paper seeks to address the main problems and issues regarding the growth in international trade and outsourcing. It is divided into two sections. The overview of the international trade and role of WTO in growth of world trade will be discussed in chapter 2. Chapter 3 deals with the outsourcing and effects of international trade. In this chapter it is described what is outsourcing and its applications in a global economy. Also it is written about positive and negative effects of international trade to local consumers and producers. The main emphasis is put on the first section which is about the growth of international trade. This section is divided into two parts. The first part provides an overview and analysis of the international trade and trade effects. Accordingly second part deals with benefits from international trade. The paper ends with concluding remarks in chapter 4.
2. The growth and benefits from International Trade
2.1. Overview and growth of international trade
One of the main reasons for the fast growth in international trade is caused by the process of trade liberalization which started taking place in the latter half of the twentieth century. After World War II a group of countries engaged in multilateral negotiations that would eventually lead to the creation of the General Agreement on Tariffs and Trade (GATT) in 1948. Under the GATT countries agreed to cut tariff rates that could lead...
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...e indicate that being a member of WTO will increase total world export. From producer’s perspective, it will push them to produce more competitive products in more efficient way. In order to compete with the rest of the world you have to be the best among them.
With global players entering the local market, domestic producers will be pressed to improve the quality, production efficiency and restructure their businesses in order to compete with foreign producers.
After analyzing advantages and disadvantages of being a member of WTO, the final conclusion is that overall advantages of membership outweigh the disadvantages. And to summarize, the overall results from the studies show a positive effect on the economy and sustainable growth in global trade. Accession to the WTO is one of the main steps toward the strong and sustainable economy in a global market.
Trade is the most common form of transferring ownership of a product. The concepts are very simple, I give you something (a good or service) and you give me something (a good or service) in return, everyone is happy. However, trade is not limited to two individuals. There are trades that happen outside national borders and we refer to that as international trading. Before a country does international trading, they do research to understand the opportunity costs and marginal costs of their production versus another countries production. Doing this we can increase profit, decrease costs and improve overall trade efficiency. Currently, there are negotiations going on between 11 countries about making a trade agreement called the Trans-Pacific
...ystem primarily responsible for promoting global competition. Free trade also promotes shifts in production so as to fit the “comparative advantage” model. Though free trade is widely practiced concerns with how to regulate free trade, something supposedly unregulated, countries have to subject themselves to the controversial institutions of the IMF and WTO. Fair trade policies while potentially creating smaller markets support workers’ rights in both the U.S. and developing nations. Though the pros and cons of globalization continue to be debated the United States can no longer escape its role in the global economy nor can it impose policies that are detrimental to the United States founding ideals. However policies that play towards the advantages of both free and fair trade could stimulate a healthy domestic economy that is also competitive in the global market.
It is very important that developing countries, share in the growth and expansion that international trade can bring to them. The W.T.O. agreement recognizes the importance of how international trade can boost the economics of third world countries. In the recent economic crisis that affected us on a global scale the decline of exports in developing was smaller than those of developed country. Not all countries do or are able to participate equally in international trade because they may suffer from political and/or economic uncertainties. Asia and the US are leaders among the import/export trade while Africa, Latin America and the Middle East are minor contributors in the world trade
The Self-Description – “The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.” (1) For more information see: http://www.wto.org/english/res_e/doload_e/inbr_e.pdf
Outsourcing has been around for many years. In this paper I will discuss some of the history of outsourcing, the goods things about outsourcing, and the bad things about outsourcing.
The political force moved away from the painstakingly and time-consuming technique of multilateral tariff negotiations to smaller regional and bilateral provisions - the Regional Trade Agreement. In these arrangements; members accord preferential treatment , basically agreeing to liberalize the exchange of goods and services amongst each another giving regard to certain trade barriers. RTA is not the first-hand way of trade liberalization though. Initially, when multilateral trade discussions used to happen, two-sided and multiparty FTA”s filled the vacuum. There were restrictions from stringent and premeditated trade arrangements earlier, thus a lot of states are now moving towards freer trade for their own benefits.
It is worthwhile to review some theoretical backgrounds supporting that trade openness can led to growth, as Marshal said in 1890 (as cited in Thirlwall p. 504) ‘the cause which determines the economic progress of nations belong to the study of international trade”. Robbins (2003) summarize some ( This part also mentions criticisms against those theories.
Global trade occurs between many nations. While the intent of free trade is just that for trade to occur freely without government intervention in the open market. The truth is that governments do intervene in free trade imposing many sanctions, tariffs, quotas and other economic policies to limit free trade. To better regulate governments role in free trade a General Agreement on Tariffs and Trade (GATT) was created in 1947 (Carbaugh, 2011, p. 191). GATT helped trade by having all nations, included in the original group, trade on mutually beneficial policies. GATT has since been replaced by the World Trade Organization (WTO) that still honors many policies of GATT that now includes 153 nations that is inclusive of 97% of all world trade.
Firstly, what should be noted here is that international trade has been providing different benefits for firms as they may expand in different new markets and raise productivity by adopting different approaches. Given that nowadays marketplace is more dynamic and characterized by an interdependent economy, the volume of international trade has grown substantially in recent years, reducing the barriers to international trade. However, after experiencing the economic crisis that took its toll in 2008 many countries adopted a different approach in terms of trade barriers by introducing higher tariffs in order to protect domestic firms from foreign competition (Hill). Secondly, in order to better understand the implications of the political arguments for trade it is essential to highlight the main instruments of trade policy (See appendix 1).
International trade is the growing share of global production and growth in trade is expected to outperform
After the failed International Trade Organization, Rodrik discusses the Bretton Woods Agreement, the transition from the General Agreement on Tariffs and T...
To sum up, the developed countries have enacted legislation which is meant to supervise any form of trade that involves the primary products. The supervisory programs are inform of tariffs which are controlled by the developed countries. This means that there is tariff escalation a...
Krugman, P.R. (1987) Is free trade passé? The Journal of Economic Perspectives, 1(2), 131-144. Retrieved from http://dipeco.economia.unimib.it/Persone/Gilli/food%20for%20thinking/simple%20general%20readings%20on%20economics/Is%20Free%20Trade%20Passe.pdf
Globalisation has been one of the most significant developments of the last half century, and issues such as trade and international commerce have become increasingly important. In consequence, problems such as poverty, unfair wages and poor working conditions in third world countries have been drawn to the attention of consumers (Hayes and Moore, 2007). This is a growing global issue which cannot be ignored by anyone concerned about the problems in developing countries. Free trade and Fair Trade have both been offered as solutions to these issues.
Tussie, D., & Aggio, C. (n.d.). Economic and social impacts of trade liberalization. Retrieved from http://www.unctad.info/upload/TAB/docs/TechCooperation/fullreport-version14nov-p106-119.pdf