Globalization and International Trade

Globalization refers to the growing interdependence of countries resulting from the increasing integration of trade, finance,people, and ideas in one global marketplace. International trade and cross-border investment flows are the main element of this integration.

Globalization is driven by two main factors. The first one is, the advanced technology is causing the cost of transportation, communication, and computation has been lowered that it is often economically affordable for a firm to locate the phases of production from another countries. The other factor has to do with increasing liberalization of trade and capital markets: more and more governments are refusing to protect their economies from foreign competition or influence through import tariffs and nontariff barriers such import quotas, export restraint, and legal prohibitions. A number of international institutions established in the wake of world war II such as the World Bank, International Monetary Fund (IMF), and General Agreement on Tariffs and Trade (GATT) have played an important role in promoting free trade.

This process of economic development and growth around the world has inevitably been changing the patterns of trade and the comparative advantages of many of the nations that have been or are becoming to a greater extent America’s trading partners. Labor and manufacturing specializations that the United States has long been dependent on for employment, income, and profits are now shifting to other parts of the globe. Once peoples and markets on continents outside North America began to become relatively freer and less collectivist—though certainly not laissez faire, unfortunately—these changes in the structure of the international division of labor were inevitable.

But besides their inevitability, the changes also are opening healthy and desirable opportunities for hundreds of millions of people to finally raise themselves out of the poverty that has been the lot of mankind for all of human history. We should hail this as one of the greatest moments in the thousands of years of man’s time on this earth.

References:
http://www.lincs-chamber.co.uk/images/stories/InternationalTrade%20cloud.jpg
http://www.globalissues.org/issue/38/free-trade-and-globalization
http://www.worldbank.org/depweb/beyond/beyondco/beg_12.pdf
http://www.fee.org/the_freeman/detail/globalization-and-free-trade

Created By :
Hardiyanto Gunawan / 1701327144