Essay on Effects Of Trade Liberalization On Efficiency And Growth

Essay on Effects Of Trade Liberalization On Efficiency And Growth

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Literature Review
The effects of trade liberalization on efficiency and growth is a heated debated among modern-day economics (Stiglitz, 2006). Over the years, Trade agreements and trade liberalization have built a reputation of content and animosity among Economists. From the impact of trade liberalization on the environment and the subsequent disguise of protectionism as environmental protection (Harold, Runge, & University of Minnesota, 1993) growing inequities and the disparity in agricultural production, limitations in the access of markets and discriminatory trading policies were at the core of the Uruguay negotiation rounds in 1995 that led to the Creation of the World Trade Organization (WTO). The WTO 's non-discriminatory principles meant that each country would treat all others the same— the bedrock of the multilateral system (Stiglitz, 2006) while including, the principle of national treatment: both foreign and domestic producers would be treated the same, and be subjected to the same regulations.
Supporting literature on the benefits liberalization models a scenario where a 50% decrease in agricultural subsidies, tariffs and OECD support on agriculture finds that trade liberalization in agriculture will lead to an overall expansion of agricultural markets simply put, because the countries involved would gain continuous access to other markets. Similarly, economies of scale would have opportunities for to be fully employed and thus, maximized. Lastly, Global Trade would see an increase of 12% in the short run, compared to a 15% in the long run (Meijil & Tongeren, 2004). Effective trade liberalization would emphasize the different strengths and weaknesses of the countries involved led as well as their comparative advan...

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...etter access to manufactured goods. Supporting Literature found that further economic cooperation among these two countries could yield positive results in the long run.
Given that EU (including the Netherlands)- and the US together, accounts for over the half of the world 's population an increase in global trade and investments it would in turn reduce trading cost among both countries and overall convergence of both economies. To illustrate this a modeling trading scenario where trading barriers would be decreased by 25% and a 75% decrease in manufacturing would boost not only GDP but also an increase both imports and exports for the US and the Netherlands (Van Berkum, Rutten, Wijnands, & Verhoog, 2014). The following research takes a look at this historical partnership and the reaping benefits of improved, closer agriculture trading relationships after the DDA.

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