GLOBALIZATION AND FREE TRADE 5
Globalizationand Free Trade
Globalizationand Free Trade
Theimpact of globalization has been felt in various sectors of economiesworld over.As a result, various bodies such as the InternationalMonetary Fund, World Bank, and the World Trade Organization has beenon the frontline in ensuring free trade takes place as well as theglobalization of trade. Globalization involves trading across manycountries and has seen the quick rise of multinational andtransnational corporations with branches in various parts of theworld. To promote the globalization, the involved institutions havegone ahead and come up with statutes and regulations to aid theirspread with the aim of promoting the global economy. The regulationspromote free trade through exempting most of the barriers that maycome in place, thus giving room for easy business.
Is Necessary to Global Economy?
Tradeis a necessary tool for the general economy. Globalization of tradeis an added advantage as it is instrumental in ensuring trade growthand development takes place. Through trade, the economy is boostedboth locally and internationally and can thus be termed as a majortool for global economy boosting. Important to note, free trade andglobalization has affected, and equal measures, reshaped almost everyother industry and sector. Global trade has ensured that each countrybecomes a jack of all trades regardless of what they produce and whatthey do not. Free trade, on the other hand, has been put in place tomake sure that globalization of trade is not only made possible butalso easy.
Theeconomy has been significantly affected by the level of creativityand innovations. The competition brought about by the global tradehas kept most businesses on their toes, teaching them the need forbeing innovative, and consequently, an improved economy. While amultinational company benefits the country in which it is operating,it also benefits its mother country. This explains how it hasactively contributed to a better global economy. Historically, nonations have achieved much development without incorporating tradeinto its systems. It can be noted that countries such as China,Taiwan, and Korea as well as some of their other neighbors were ableto lift an approximated three hundred million people from the chainsof poverty through trade in the mid-1970s.
Hasthe international community been able to regulate the global economyand how effective has it been?
Precisely,the regulations and objectives of free trade and globalization oftrade have not been effective. While the original idea was to haveall the nations benefit, this has not been particularly so.Globalization of trade has been seen to benefit the developed nationswhile the third world countries and who were to be part of the mainbeneficiaries of free trade have continued to suffer as rich nationsgrow richer and richer from their own land(Lovasy, 1941).Most of the multinational and international companies havecontinually sent back money to their own country while some go to theextent of even sourcing for labor from their native land.
TheWorld Trade Organization has been highly controlled over the years bythe developed countries while the developing and underdevelopedcountries continue to follow what they agree on. United States ofAmerica and some European nations, and especially those in theagribusiness, financial and pharmaceutical industry have continuallyinterfered with the decisions made by WTO. On the other hand, theInternational Monetary Fund has been over the years directly orindirectly managing the economies of the developing and third worldcountries. This way, they have provided solutions to access tofinances, but which end up getting back to the developed countriesthrough trade globalization and free trade(Drozdz & Miskinis, 2011).
Drozdz,J., & Miskinis, A. (2011). Benefits And Threats of Free Trade.Economics,40-48.
Lovasy,G. (1941). International Trade Under Imperfect Competition. QuarterlyJournal of Economics, 55(4),567-583.