International trade Essay Example | Topics and Well Written Essays - 2250 words

International change - Essay ExampleThe theory of comparative profit insinuates that reducing trade limits (trade liberalization) and opening up global markets would lead to benefits from trade for all parties concerned. However, the theory is one thing, getting nations to agree to break down Byzantine trade obstacles they put one over put up over the years is another thing altogether. Taking this complexity into account, how is it possible to know that countries that claim to guard relaxed their trade restrictions actually have? Even if it is possible to confirm that this has happened, is there any evidence to ascertain that trade liberalization actually brings benefits to the developing world, where problems arising from the difficulty of crafty the markets of the developed world are very grave? This paper aims to answer this question and to a greater extent. Key words Trade liberalization, protectionism, trade barriers, tariffs, quotas, comparative advantage to a greater ex tent or less studies (extensive and comprehensive studies going back as far as the 70s and 80s, and more recent (though less reliable) ones conducted using cross-country regression analysis) strongly indicate that countries that have more liberal trade laws grow faster and have more open economies compared to those that have more protectionist policies (Buffie 2001, pg. 15). Since 1980, the PCIs of third world countries that have a have population of over 3 billion people have doubled this is according to figures released by the OECD and the World Bank. In addition to this, they have managed to slash, by more than 30%, their mean import tariffs, as well as almost tripling their ratios of trade-to-GDP. This means that only third world countries that are less developed, have combined populations of less than 2 billion, whose trade-to-GDP ratios and PCIs are stagnant, and who have insignificant decline in mean import tariffs, are left. Unlike the rest, the new globalizers have simila rly witnessed dramatic improvements in welfare indicators and significant reductions in poverty. A lot has been made of the Worlds Banks decision to revise its approximations of future effects of trade liberalization. They are not unimportant. However, trade liberalization only is not a panacea (Okamoto 2004, pg. 46). In order to fully realize productivity benefits, outside(a) liberalization should be integrated into comprehensive market-based reforms and be supported by institutional reforms that buttress markets just like David Hume and Adam Smith indicated more than 2 centuries ago. The main point however remains that richer developing countries are those that have carried out massive liberalization of foreign direct investment (FDI) and external trade as a part of a broader move towards market economies (Vietnam and China are the perfect examples). So much for the very fallacious control that high protection in Vietnam and China has not stifled fast growth and has in fact t riggered it. Should only developed countries liberalize trade during the capital of Qatar round? Northern trade limits suppress exports from labor-intensive developing countries, and are therefore very iniquitous. However, what groups like Oxfam do not say is that the protectionist policies of developing countries wounded them even more (Rogowsky & Linkins 2001, pg. 37). Such liberalization would benefit unskilled rural labor