Global Trade: The Cause And Effects Of International Trade

2037 Words9 Pages
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... ... middle of paper ... ...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.
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