Globalisation And Regionalism: The Process Of Globalization Vs. Regionalism

Some economists believe that free trade is the best practical guide we have to policy and if in doubt, liberalise, even if no other government is doing the same. Whereas, In contrast proponents believe that free trade only produces efficient outcomes if other necessary conditions are in place such as near perfect competition and information. At the global level, competitio...

For more than two hundred years, free trade has been the reliable solution put forth by most prominent economists. If protectionist measures were done away with completely, theoretically each sovereign nation could rise to their highest capacity according to the theory of comparative advantage, thus leading to mass output, higher living standards for citizens and a net gain for society. The 2003 Economic Report of the President reported that free trade: “... Brings greater specialization according to comparative advantage, lower prices, and a wider selection of products and services for both consumers and firms. Openness to trade allows exporters to sell their output in a larger market; workers in export industries benefit as the resulting higher prices for the goods they make translate into higher wages and incomes.” (CEA).

Free trade is a policy that lifts all trade tariffs and barriers and thus encouraging the free movement of goods (imports and exports) between nations. Agreements to free trade establish free markets where countries can engage in trade in a free and conducive environment. This type of trade is made possible by free trade agreements made between countries. According to the International Trade Administration, these agreements help minimize barriers to exports form the US, protect their interests as well as enhance the rule of law in member countries. NAFTA is one of such agreements.

It is not doubtful that consumers in the developing countries could always get benefits from trade liberalization as they can buy the cheaper goods and enjoy the high quality products. In addition, exporters also get benefits from trade liberalization, because they have larger markets. However, producers face the opportunities and challenges in developing countries. Considering that the producers with more productive will get the benefits, but the less efficient ones will get the loss. Obviously, when international competition increases, producers will take more pressures to improve their productivity to meet the needs of the international market. Surely, the companies unable to improve productivity will be pushed out of the international market. The trade liberalization will stimulate the firms of developing countries to improve their productivity in order to get benefits from the

People can analyze the different between Fair Trade and Free Trade. Cafedirect just need to maintain

...e for the US. Indeed, the skilled workers productivity and subsidies provided by states are consequential obstacles that American players cannot face those challenges on their own. They will need the government to intervene in their favour to stay competitive. (Wilkerson, 2011)

Keeping a nation’s economy going is a very difficult balancing act. Things the country itself does, like pass new laws, can effect a countries economy greatly. Situations were economies are hurt by new laws are completely in the hands of the countries government. In some situations it’s not in their control at all. This is like the situation with Scotland and its trade with Russia. The actions Russia has taken with the Ukraine have caused the European Union to put sanctions on Russia. This intern has hurt Scotland’s economy greatly. The country usually exports 45 million GPD of food and drink to Russia but 22 million GPD was stopped by the sanctions. That is a huge loss in revenue and has far reaching affects, the normal trade of these countries can be seen in the image bellow. Also it not only affects that sector of the economy but ripples through the whole economy (Maddox). However, this situation is not a new one and its causes can be traced back to the Cold War.

“Institutions are essential; they facilitate cooperation by building on common interests, hence maximizing the gains for all parties. Institutions provide a guaranteed framework of interactions; they suggest that there will be an expectation of future encounters. They facilitate cooperation by building on common interest, thus maximizing the gain for all parties.” (Mingst, 2011) This theory supports the idea that if one cooperates with the other they both will gain, but once the established trust is lost between the cooperating countries, one should do whatever is in their own economic i...

...roducts through taxes and tariffs as to those who do not take part in it. Also, most products of Fair Trade are only available in specialty shops, such as health food stores, rather than stores who receive a wide distribution of goods.

Moreover, international trade can be more effective in reducing poverty than outright aid in which trade can help any country become self-sufficient, rather than relying on foreign assistance. However, there are, many disparities within the present global trade system that work against poor countries. That is regulated by a set of rules created by governments over the years. In general, poor countries don't have access to developed countries’ markets because of the barriers of trade and agricultural. It’s difficult for poor countries, because of trade barriers, to sell their products abroad and develop their living conditions. While free trade benefits everyone, governments sometimes aim to protect their goods and markets by providing subsidies to local rules and producers, or creating barriers like tariffs and quotas. This particular practice is known as Protectionism; which can be identified as the economic policies and procedures of controlling trade between states...