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Globalisation of Trade - Literature review Example

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Globalisation can be simply defined as the process of incorporating national cultures in order for fostering international trade, direct foreign investment, migration, and technology sharing…
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Globalisation of Trade
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Download file to see previous pages The very idea eliminated international trade barriers which in turn intensified liberalised cross border trade. As Cairola (2007) points out, developed countries dramatically increased their production levels during the 1950-70 by through international diffusion of mass production and assembly lines; hence, there arose a need for finding new markets to supply excess products and services. Companies believed that exporting of these excess items to foreign needy markets would be a potential strategy to promote growth (ibid). In addition, intra-firm trade also contributed to the current international trade. On the other hand, developing nations also supported the idea of internationalisation of global production since they find it as a way to enhance their growth by supplying raw materials and labour to multinational enterprises. As the author points out, between the 1960s and the 1980s, developing economies started to change their focus from import substitution to export promotion policies with intent to enhance economic stagnation. They also gave specific importance on their industrial development. Thus, developing economies eventually began to integrate into the global trading system even though their participation is still lower as compared to other developed economies (ibid). In order to take advantages of the trade liberalisation, organisations today are trying to become less hierarchical and more decentralised. Undoubtedly, multinational corporations obtain more advantages of trade globalisation as they get free access to global markets despite cross border barriers. In order to enhance foreign investments, governments are promoting development of transnational corporations. Even though countries like China put obstacles to foreign investment, currently they are softening their attitude towards multinational enterprises. Globalisation critics argue that multinational corporations take unfair advantages over poor countries by exploiting their physical resources and labour. This criticism seems to be true to some extent while analyzing regions like Africa and Latin America. As Domer (1999) points out, African countries still remain underdeveloped whereas the Latin American region is still dependant on Western economies. The author points out that the African economy’s growth rate stood at around 2% over the 1984-1993 period and this poor rate was not enough to meet even increasing needs of the African population (ibid). The increased European influence and lack of an effective leadership significantly contributed to Africa’s stunted growth. Weakening commodity prices was the major growth impediment to Latin American countries in 1990s; and many of the Latin American countries still heavily depend upon capital inflows from industrialised countries due to their huge external debts (ibid). Arguments for globalisation of trade The process of trade globalisation has benefited economies across the globe to obtain uninterrupted supply of different goods and services and take advantages of improved overseas facilities. Some of the benefits of globalisation are listed below. 1. Improvement in international relations As a result of globalisation of trade, the concept of global economy came into existence which in turn enhanced the growth of different segments of the international market. In addition, the globalisation process resulted in the creation of a global market and a global system of production. Evidently, capital marketers also enjoy far reaching benefits of globalisation as this concept has led to the integration of financial systems. With the emergence of globalisation, dramatic developments took place in the area of telecommunications media which ...Download file to see next pagesRead More
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