GLOBAL TRADE LIBERALISATION

Global Trade Liberalisation



Global Trade Liberalisation

Introduction

The new challenges that developed and developing countries alike encountered met by the introduction of neoliberal economic policies. Integration into the global economy proved to be a valuable tool for promoting economic growth, development and poverty alleviation at national level. In the last two decades, world trade has averaged 6% annually, or twice the gross world product. However, there has been an engine of growth much earlier. Since the creation of the General Agreement on Tariffs and Trade (GATT) in 1947, the global trading system has benefited from eight rounds of multilateral liberalization, as well as regional and unilateral liberalization. In fact, the last (called "Uruguay Round" and completed in 1994) led to the founding of the World Trade Organization, responsible for managing the growing number of multilateral trade agreements.

International trade and global economy

The result has been the improvement of living standards in the world. This prosperity has come to most developing countries, and some revenues have increased dramatically. As a group, developing countries have become much more important: today concentrate a third of world trade, compared to fourth, in the early seventies. In many manufacturing and services been imposed on traditional commodities in export flows, which now integrated into 80% for manufactures (Bhagwati 2004, 23).

However, in many other countries, especially Africa and the Middle East, progress has been so rapid. The poorest have lost a substantial share of world trade and are at risk of being marginalized if they do not reduce their own barriers. This is the case about 75 developing economies in transition, including almost all the LDCs. Unlike those who have successfully integrated these countries, have a disproportionate dependence of the production and export of traditional commodities. The reasons for this exclusion are complex and include deep-rooted structural problems, weak institutions and regulatory frameworks, and internal and external protection structures (Mansbach and Rafferty, 2008).

Flow of Capital

One of the core parts of global trade liberalization is the financial services between the countries. This can be proven by the fact that there is growing integration of markets and economies, on the one hand, while the worldwide banking institutions are playing the driving role in global trade and the globalization of the corporate world. There has been a freer flow of capital as a result of deregulation of capital markets in the 1990s, incorporating not only the developed countries but also the developing nations. As the significance of the flow of capital across countries and continents is growing, the need and state of global financial services is securing significant importance. Moreover, the major part of the global economy is international banking. It is essential for the movement of capital around the globe through facilitation of loans, provision of financial advice, and contribution in securities markets (Kegley 2009, 12).

Political influence and power

Political influence and power plays an important role in the global trade for a nation. For instance, most of the countries around the world attracted towards China due to its economic development ...