Introduction
Global trade has increased remarkably in
the past decade especially after the global economic crunch that nearly brought
most economies to their knees. The global financial crisis undermined economies
growth and development processes and also hampered efforts that sought to
broaden opportunities and improve the living standards of the populace. However,
global trade has since steered away from the crisis. It has played a cardinal
role in boosting sustainable growth of the least developed countries (LDCs).
Alongside global trade, the increased flow of capital investment across
international borders will largely ignite economic growth and development and
rapidly reduce the vicious cycles of poverty in developing economies. Moreover,
the global transfer and subsequent division of labor are expected to foster
changes related to distribution in most economies. Liberalization and free
trade are important components necessary for enhanced global trading. In
addition, the economic policy makers of most countries rely on the cocktail to
enhance their aggregate standing economically. Trade liberalization is believed
to have been a central ingredient in the growth of developed economies (Sidhu, 2007).
This report seeks to dissect issues related to global trade with a view of
pinpointing key policy lapses and adopted strategies that might foster trading
between economies. In addition, it seeks to advance a number of issues that aim
to address the undying issues of poverty in the developing economies.
Thesis Statement
Global review of liberalization and
free trade policies are paramount in enhancing trading across borders. The
problems related to the place of agriculture in global trade is a crucial
problem that needs to be addressed swiftly as a way of laying economic
foundation for developing economies. Most developing economies are experiencing
distortions in the agriculture business due to gagging protectionist measures. The
citizens of developing countries are languishing in abject poverty because of the
rigidity of these protectionist measures employed by their governments and
partners. Therefore, the disbandment of these rules and subsequent formulation
of friendlier ones will foster not only the region food security but also
improve the foreign receipts of economies.
In addition, their eradication will bring down poverty levels in record
numbers while enhancing equity between citizens. Furthermore, the issues are a
key to the realization of the millennium development goals.
Issues related to global
agricultural trade in less developed countries (LDCs) have been in existence since
independence although other scholars assert that some of these problems existed
even before independence. During the mid-20th century, these issues
were a major source of concern globally. However, in the late 1980s, interest
on the subject declined rapidly. The United Nations Conference on Trade and
Development (UNCTAD) removed the issue from their priority least in relation to
other important global agendas (Robbins, 2003). The aforementioned move is one
of the very unfortunate scenarios as it has had devastating effects on quite a
number of the Less Developing Economies (LDCs).
Global Trade and
Development
The primary challenge facing policy
makers in the 21st century is the formulation of sound policies that
will fully address the issue of vicious cycle of poverty. A world where there
is a wide gap between the rich states and the poor economies is unacceptable.
The developing economies are often associated with these populations who
survive on less than a dollar a day. Adam smith asserted that no society will
be accredited as flourishing and happy while quite a number of its citizens are
poor and very miserable (Sidhu, 2007).
In the late 19th and the entire 20th century, quite a
number of proposals and schemes that sought to foster economic growth and
development of economies were advanced. Issues related to donor funding,
population control and capital investment was captured by these papers.
However, all these schemes have failed or in the verge of failing to spur
growth and development or even unlock prosperity doors of developing economies
(Zurich, 2011). The failings of these
schemes hyped the search of a singular measure that brings together the
different ideas envisaged in the schemes although in an idealistic and rational
manner. The singular measure that incorporated the entire scheme policies was
seen as an ultimate guarantee of development in the least developed economies
(LDCs).
The amalgamation of policies in the
past decade brought out a giant measure internationally, global trade. Policy
makers assert that economies who embrace global trade are able to spur their
development and break their vicious cycles of poverty. There are quite a number
of ways that economies can use to maximize the benefits associated with global
trade, however, they are all dependent on the liberalization of both domestic
and international policies. Despite the posing grave challenges to the
political governance of an economy, trade liberation positions a country to
harness more from increased levels of economic activities (Dhabi, 2012).
The increased levels of revenues that
result from global trade are vital in the realization of developmental
objectives of an economy. A good example of these developmental objectives is
the Millennium goals commonly known as MDGs. The MDGs seek to address issues related
to poverty eradication, education, child mortality issues among others. The
realization of these goals relies largely on the economic performance of an
economy. This implies that economies that have embraced global trade are able
to realize them much faster than those that are yet to harness the benefits
associated to international trade (Blaise, 2003).
Global trade is not an end in itself,
but a vehicle that is paramount for the improvement of living standards through
rational utilization of national economic resources. Therefore, it is apparent
that trade liberalization is a keen to the enhancement of economic state of a
Least developed economy. Countries need to relook further into their trade
policies to ensure that they meet the international standard level. In
addition, it should seek to engage in many trade negotiations to ensure that
the borders of its trading partners are not restrictive. This will foster the
free flow of goods and services across borders. On the other hand, developing
economies need to adopt only sound policies that will encourage their
development (Zurich, 2011). This will
ensure that those trade policies that pose threats to economic development are
put at bay or at least contained.
Global Trade
Liberalization
Sound trade and economic policies that
open up economies for trade need to be formulated to enhance increased levels
of trade and capital investment. Countries that have been able to make major
strides in the past have embraced such feasible policies. In the recent past
for example, no single economy was able to thrive economically i.e. improving
its citizen’s living standards singlehandedly without embracing other
economies. In the contrary, global trade liberalization has played a cardinal
role in the success of East Asia economies. For example, East Asia has seen a
remarkable drop of import tariff to 10% from a record 20% in a period of twenty
years (Sidhu, 2007). Developing economies have not been left
behind either on matters liberalization. The opening up of their boundaries to
accommodate other states has boosted their competitive advantage. In addition,
trade liberalization opens up an economy to foreign direct investment (FDI).
These investments are robust avenues for employment to the local citizens.
Foreign direct investments have rapidly reduced the unemployment rates and are
accredited for breaking the vicious cycles of poverty. According to OECD (2000),
the poverty levels declined by a record 14% between the year 1993 and 1998.
The economic prosperity of an economy
relies largely on the formulation and subsequent adoption of feasible trade and
investment policies. According to Robbins (2003), over a billion jobs currently
enjoyed by the global populace are in one way or another derived from global
trade. This implies that global trade is the backbone of most economies as it
not only creates avenues for employments but is also responsible for foreign
receipts. The rationale behind full realization of global trade benefits is the
elimination of trade barriers. Trade barriers minimize the movement of goods
and services between states. Therefore, their dismantling enhances economic
growth and subsequent macroeconomic stability of an economy. That is possible
as exchange between economies is eased. Developing economies need to support
the World Trade Organization (WTO) on matters trade liberalization.
The least developed economies often
benefit more from freeing trade. Developing economies accrue subsidies from
developed economies that are channeled to liberal economies. In addition the
increased economic growth and development that is often associated with free
trade brings with it an increase in income. Therefore, citizens from these
developing economies are able to improve their living standards through an increase
of income. Moreover, increased foreign investments lead to establishment of new
firms that brings with them new jobs. The unskilled populaces are able to
secure new jobs which transform them to middle class people (Blaise, 2003). The
general improvement people welfare guarantees economic growth of a state. In
addition, it aids in breaking the vicious cycles of poverty. From the above, it
is noteworthy that open economies are able to accrue more benefits from global
trade than their counterparts who are exercising trade protectionism. Indeed,
the benefits associated with liberation outshine the costs associated with the
opening up of an economy to other states. A guess in point is India and Uganda;
these two economies have been able to rapidly grow their economy by opening up
their markets. In addition, the above move has slashed poverty by larger
margins. According to OECD (2000), on average, less developed countries (LDCs)
that embrace trade liberalization in the late 20th century realized
massive growth than those who did not.
Trade liberalization has brought with it
a lot of benefits to both the developed and the developing economies. Despite
the magnitude of these gains, developing economies are not able to fully enjoy
these gains. That is largely because they still over depend on developed
economies for aid. For example, of all the liberalization gains, the less
developed economies (LDCs) only enjoy a 30% with the developed economies going
with the other percentage. However, the developing economies can still tighten
its borrowing policies to ensure that it equally enjoys the benefits from trade
liberalization and free market. Despite the amount of benefits harnessed from
accessing the market of a trading partner, countries are better placed to
benefit massively by freeing their own markets. However, industrial economies
are well placed to accrue more gains given they remove protectionism policies in
their agricultural markets (Robbins, 2003).Industrial economies have often been
lambasted for not liberalizing the agriculture. These economies are associated
with high protection measures that are often derived from high tariff levels.
According to FAO (2003),
agriculture has the highest average of tariff when compared with manufacturing
i.e. it is nine times higher. This showcases agriculture as one of the areas
that need a lot of consideration in matters liberalization. The developing
economies are also better placed to benefit from the liberalization of
agriculture. However, those economies with relatively low income have great
potential of gaining a lot from the liberalization of Agriculture. This is
relatively because they are largely depended on it for survival and growth. In
addition, a good number of its citizens are dependent on agriculture meaning the
sector affects them directly.
Global Agriculture
trade
The livelihood of most developing
countries is agriculture. That is, their foreign receipts are largely inclined
towards agriculture. This is so because agricultural produce make up a major
part of their exports. For agricultural exports, protectionism and tariffs pose
a major threat to the survival and subsequent thriving of the economies.
Developing countries look up to agriculture to address the United Nations
Millennium development goals. The global agriculture trade is a cardinal issue
that cannot be brushed off easily when it comes to international trade. This is
because the subject has elicited a lot of significant debate that collapsed
World trade Organization conferences back in 2003 (Raynolds, 2012). Problems
associated with global trading of agricultural produce have advanced effects on
developing economies simply because agriculture is their primary source of
export. In addition, agriculture is the source of livelihood for most citizens
in these countries. Therefore, enhance global trade, issues surrounding
agriculture need to be solved. This will enable developing countries contain
the acute poverty levels as well as position themselves well globally by
enhancing sound relations with their trading partners.
Developing economies are faced with
acute problems that are often interrelated. First is the issue of global market
instability. Instability in the global market largely hampers the development
capabilities of developing economies. Decline in the export price of
agricultural produce jeopardizes the competitiveness of the third world
countries. This is because it their foreign exchange receipts are largely
affected. In addition, considering these economies rely primarily on
agriculture, its citizens will not be able to meet the ever rising cost of
living. Secondly, the capacity of these economies also does not match the
international demands. This alienates them from the derivation of enough
benefits from their exports. Thirdly, developing economies have continually
tightened their protection policies related to agriculture. This rapidly
hampers their chances of benefiting from global trade because the policies
curtail free movement of goods from other trading states. Finally, developing
countries lack the production capacity that is able to quench global market
thirst. This is a cardinal reason why the less developed economies are unable
to accrue full benefits from global trade. From the aforementioned, it is
apparent that even if the global agricultural market was liberal, the
developing economies could still be disadvantaged because of the dent in their supply.
To harness the full benefits of global trade, developing economies need to
formulate sound and rational policies related to exports (FAO, 2003).
To address these impending problems
related to agricultural trade, the World Trade Organization needs to exert more
pressure on developing economies. This will see them drop their protectionism
measures and ease the movement of products across borders. In addition,
financial bodies i.e. the World Bank and the IMF need to align their loan
condition with the teething problems facing the agricultural sector. Tight financial conditions have seen a number
of nations rethink their policies in the past (OECD, 2000).
In conclusion, global trade has done
remarkably well in improving the economic state of most less developed
economies (LDCs). The trade has increased the level of capital investments that
have consequently opened up growth opportunities. Moreover, economies have been
able to break the vicious cycles of poverty. The aforementioned was made
possible by the sprouting of new companies that created employment avenues to
the masses. However, the ultimate gains associated with international trade are
yet to be fully realized. That is so because quite a number of developing
economies still embrace protective policies. In the other hand, some who have
embrace free market are not able to derive the full benefits as they are still
gagged by foreign debt burden. As from the discussion above, agriculture which
is the backbone of most economies is experiencing a lot of problems in the
international spheres. Instability in agricultural market and other associated
problems of pricing jeopardizes development plans of developing economies.
Therefore, World Trade Organizations needs to prioritize the underlying issues
of agriculture to salvage the developing economies.
References
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The cotton submission by West and
Central African countries. Address by President of Burkina Faso to the WTO
Trade Negotiations Committee
Dhabi, A (2012, November 09). Free
trade is necessary for a global recovery. UAE
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FAO .(2003, March). Some trade policy issues relating to trends in agricultural imports in
the context of food security.
Raynolds, L. (2012). Fair Trade: Social Regulation in Global Food
Markets. Journal of
Rural Studies, 28(3), 276-287.
Robbins, P. (2003). Stolen Fruit: The Tropical Commodities
Disaster. London: Zed Books.
Sidhu, R. (2007). GATS and the New
Developmentalism: Governing Transnational Education. Comparative
Education Review, 51(2), 203-227.
Zurich, W. (2011, March 24). Global
trade recovery takes uneven course, says ICC Survey. Arabia 2000.
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