In this chapter an exploration will be made of areas of influence in international trade in relation to their ability to deliver progress to developing countries. The literature and sources explored aim to uncover their strengths and weaknesses, grounding the research in a well developed context while also revealing areas which will feed into further research and analysis.
2.1 Globalisation and Free Trade
Globalisation has the potential to relieve those captive to poverty, and it is commonly accepted that it should aim to provide ubiquitous prosperity and economic development along side sustainability and cultural diversity (Tiemstra, 2007). Globalisation is viewed as a shift of economic activity towards further international integration and interdependence, which many perceive to be inevitable and irreversible (Panić, 2011).
Adam Smith was an eighteenth century pioneering British economist, who had strong arguments for free trade as a macro-economic approach to increasing the wealth of the nations (Stone, 1992). His depiction of free trade includes improvement of the living standard for communities as a whole through increase in market size and decrease in prices. The main arguments made by Smith, as explained by Stone (1992), hold striking resemblance to ideas held by modern economists; Bhagwati (2007) claims that observation and scientific evidence show globalisation to be a poverty reducing tool, and importantly, specifically indicates that free trade is the crucial element. His book contains many anecdotal examples of how trade has been used as a strategy to spark growth and increase wealth in various economies across the globe.
Bhagwati (2007) also mentions however, that economic growth does not always truly lead to help...
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... what it is needs to shift towards that of Küpers’ (2011) understanding, where responsibility is stripped back to its elementary meaning as the ‘ability to respond’. It is therefore suggested that those companies which have the ability to respond to the needs of the developing economies are in a position of responsibility.
The fair trade movement is extensively deemed to be a superlatively significant CSR enterprise (Jones and Shaw, 2006), but this is distinctive from the CSR adopted by individual corporations as the fair trade movement unites around rigid standards which are not first-party regulated as are many of the alternative CSR initiatives (Reed, 2009). If greater accountability is necessary to make CSR effective in promoting justice, including enabling development through their supply-chains then third party involvement may be necessary (Macdonald, 2010).
Globalisation is the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange. Globalisation brings many benefits such as freer movement of capital, goods, and services; bigger companies are now able to operate in more than one country and because of that there are more jobs in less economically developed countries (LEDC’s). Of course there are a few disadvantages such as an intense competition and widening gap between rich and poor countries.
Fair Trade can be defined as “a trading partnership, based on dialogue, transparency, and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers – especially in the South. Fair trade organizations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional trade”. (Lyon and Moberg 2010) By encouraging more ethical consumer choice, Fair Trade challenges processes which devalue and exploit people in disadvantaged positions and the environment by aiming to re-embed commodity circuits within ecological and social relations. (Lyon and Moberg 2010) Established and enforced by Non-Governmental Organizations (NGOs), Fair Trade is a voluntary system with its success driven by the wi...
First and foremost, Adam Smith was very conscious of how the wealth was unequally distributed amongst the poor versus the wealthy, and how and if this distribution continued it would leave the poor at a disadvantage, in the sense they will never have the opportunity to move ahead and will always be at the mercy of those who possessed more wealth. Mr. Smith viewed economics contrarily than the mercantilist. Compared to the days of old, the views of economics and mercantilism based wealth on the amount of gold and silver the nation provided, and how the import of goods from other countries would adversely affect the wealth of a country, as the reality was, trade was notably one-sided, it only benefited the seller and not the buyer, and it was believed that countries can only become wealthy by making other nations or countries poorer. However Mr. Smiths’ views were in contrast, believing the wealth of a nation was centered around production and commerce and not gold and silver, his belief also viewed trade as a positive, as it could only increase productivity, and both parties would benefit from the exchange the seller as well as the buyer. (Smith, 1776)
Redding (1999) defines that globalisation as the increasing integration between the markets for goods, services and capital and at the same time the breakdown of borders. Others found that the progression of globalisation doesn’t only include opening of world trade, development of innovative technologies such as communication, internationalisation of financial markets, increasing importance of multi-national corporations, population migrations and generally increased mobility of persons, goods, capital, data and ideas but also critical issues such as infections, diseases and pollution (Braibant, 2002).
Imports and exports between countries is one of the most important factors of any economy. Imports into a country create income for our trading partners, and our exports create income domestically. Each trading partner is inter-dependent upon the other, and any shift in production or consumption can have a significant effect on a country's Gross Domestic Product. Examining the Unites States top trading relationships will shed light on the amount of economic dependence America maintains with the World's top traders.
Adam Smith is widely regarded as the father of economics as a social science, and is perhaps best known for his work The Wealth of Nations. Throughout this work Smith states and informs towards his belief that society is not at its most productive when ruled over by rules and limitations with regards to trade, and that in order for markets to maximise prosperity, a free trade environment should be made accessible. In this essay I intend to asses the way in which many of Smiths theories taken directly form his works can be applied to past and current situations, first from an economic then social, and then a political point of view. I will also outline some of Smiths major theories on market determining factors, such as supply and demand, and the labour theory of value, with focus on how these theories can be applied to current day situations, demonstrating the strength of his works.
Free trade does add wealth to the economy in a country such as America. The main reasons to support free trade are to have a higher standard of living as it allows people to improve their living standard where they can consume better quality products and services at less expensive price. With the increases of standard of living, the people who are in the state of poverty will begin to experience better lifestyles and they will not be discriminated by the richer as now they are almost equally financial stable as the normal working people.
Adam Smith’s economic genius presented in The Wealth of Nations is stimulating because it proves that the economy is constantly changing, but is founded upon basic principles that consistently remain the same. One theme that is regularly reiterated in Smith’s The Wealth of Nations is that each country’s economy plays an important role in the global economy. For example, the idea of the division of labor and trade specialization suggests that each country should utilize its’ resources and citizens’ expertise in order to maximize productivity and gain through trade with other countries. It does not make sense for a country produce a product more expensively when it can simply trade with another country. In addition, the concepts of the invisible
John Baylis, Steve Smith and Patricia Owens define globalisation as “mostly simply [or simplistically!] defined as a process of increasing interconnectedness between societies such that events in one part of the world increasingly have effects on peoples and societies far away. A globalized world is one in which political, economic, cultural, and social events become more and more inter connected, and also one in which they have more impact” (John Baylis S. S., 2014, p. 9).
It is time for the US to not only take its troops out of the middle east, but everywhere around the globe such as Europe and the Pacific, its time to drop all barriers on trade and travel, and turn foes into allies. Polls taken elsewhere around the globe consistently indicate that people around the world have respect for and favor American citizens far over the US government and admire America’s consistent productivity and a land of opportunity. America as a whole once had that great and honorable reputation and we have a great opportunity to restore peace and unity in our country as well as the world by restoring that great and honorable reputation.
...would also trigger an unintentional effect that would eventually benefited the society as a whole by maximizing the total profit if individuals all follow their self-interest to behave. Newbert explained “For, only capitalism allows individuals to automously choose their own course of action, provided that in so doing, they do not violate the rights of others by forcing them to buy or sell a given product or service” (Newbert 2003, 253). From here, we can realize Smith’s insight towards the early form of capitalism. Finally, Smith’s suggested that free trade is the only way that helps a nation to sustain stable economic growth. He thinks that mercantilism is a barrier of the growth of a nation. He claimed that a nation will be able to maximize the wealth only if they use their competitive advantage on production and trade the surplus under the free trade economy.
Globalization, the acceleration and strengthening of worldwide interactions among people, companies and governments, has taken a huge toll on the world, both culturally and economically. It’s generating a fast-paced, increasingly tied world and also praising individualism. It has been a massive subject of matter amongst scientists, politicians, government bureaucrats and the normal, average human population. Globalization promoted the independence of nations and people, relying on organizations such as the World Bank and also regional organizations such as the BRICs that encourage “a world free of poverty” (World Bank). Despite the fact that critics can argue that globalization is an overall positive trend, globalization has had a rather negative cultural and economic effect such as the gigantic wealth gaps and the widespread of American culture, “Americanization”; globalization had good intentions but bad results.
In this essay I will give a detailed explanation of what sociologists mean by the term ‘globalisation’ and how they have tried to explain it.
In the old views of economics, people were not interested in trading because they thought that through exchange they wouldn’t gain anything more valuable in return. Countries would then control this trading through taxes and protection. Smith then, showed why this method was irrational. “He argued that in a free exchange, both sides became better off” (Deeson). Free trade meant that both parties would benefit and thus, increase economic expansion in both ways. Through his morals and values he stated “A nation’s wealth is not the quantity of gold and silver in its vaults, but the total of its production and commerce” (Deeson). Through production, capitalism, and labor the industrial revolution shifted...
Fair Trade is a simple idea that improves the living and working conditions of small farmers and workers. The Fair Trade movement promotes the standards for fair labor conditions, fair pricing, direct trade, environmentalism, social policy, and community development. Businesses wishing to adopt Fair Trade practices have to purchase certification licenses, which then leads to Fair Trade Labeling Organization (FLO) sending representatives to the farms from which the products are purchased and ensures that the farmers adhere to the procedures outlined in the Fair Trade standards. Products marked by the Fair Trade label contain 100% Fair Trade certified contents. Buying Fair Trade Certified products, consumers are helping the lives of famers out of poverty through investments in their farms/communities, protecting the environment, and developing the business skills for trading. The practice of Fair Trading a good way to not only help cause awareness but also improve the lives of the workers.