International Trade and Globalisation - Case Study Example

?Introduction Free Trade signifies the free movement of goods, services as well as capital in which governments actually do not place any restrictions. Normally, governments often impose trade restrictions such as quotas, tariffs and other barriers which make it relatively difficult for other countries to actually trade with the country. It is however, critical to note that the free trade has emerged from the drive towards globalization wherein globalization is sweeping across even the fundamental structures of the society. Since 1970s, globalization has emerged as one of the strongest economic forces in the world. More and more economies are opening themselves up for the free and unrestricted trade with partners from East and West. Countries like China and India have benefited a lot from the free trade and a drive towards globalization. Over the period of time, countries like China has been able to dominate the world trade market with exporting their goods and services to other countries. Though the free trade offers important benefits to improve the overall economic conditions of rich and poor countries however, it can also serve as an important deterrent for war. Globalization and integration of economic interests of the countries make it relatively difficult for countries to fight with each other. The complex nature of international free trade and how the economic interests are intricate with each other make it extremely difficult for the countries to wage war against each other. This paper will argue and discuss that free trade stops war between countries. Globalization and Free Trade Globalization has emerged as one of the most important forces of change during recent times. What started as an economic move to open the borders and allow free trade has now made inroads into other fabrics of the society also. More importantly, changes are being observed at socio-political level where smaller and developing countries are transitioning towards democracy and improved economic performance. It is critical to note that globalization is really a diverse term and to define it appropriately may be a difficult task. Over the period of time, the explanations as well as the impact of globalization has really widened. Globalization, initially focused upon ensuring developing mechanisms and processes which can be put in place to allow nations to trade with each other with no or very restricted barriers to entry.  (Chanda, 2007) As a result of this drive towards the free trade, many nations including China and India benefited from open economies. Since developing countries are essential providers of raw material and also possess cheap labor therefore the overall benefit was perceived to be transferred to poor countries. Through globalization, poor countries were allowed to benefit from their raw materials and cheap labor sources. Apart from this, poor countries also benefited from the transfer of technology which took place due to globalization. Developed countries, in order to avail the benefit of cheap labor and raw materials actually helped transfer of technology to the poor countries to take advantage from the latest technology to manufacture goods in more efficient manner. (Escobar, 2006) One of the moves towards achieving the free trade and ensure further trade liberalization, World Trade Organization was founded. World Trade Organization or WTO is considered as the apex body which formulates the rules of the game when it comes to trade between the countries and also monitor the same. WTO not only creates the agreements which reduce the barriers to ensure free trade between the countries but also mediate the disputes between countries arising due to trade. (Moore and Lewis, 2009) The overall debate on free trade and what are its pros and cons actually are based upon two set of important arguments. One set of arguments is based upon the moral arguments and other set of arguments is purely based upon the economic impacts of free trade. The moral set of arguments was based upon the assumption that the free trade between countries can actually improve the world. This argument in favor of free trade suggested that by ensuring flow of wealth from one country to another country, international society can actually benefit from the free trade. The economic benefits of free trade however, are relatively covered extensively to include the increase in the global output, creation of specialization as well as transfer of technology and skills which can allow countries to effectively trade with each other. The trading bloc allowing free trade with each other actually results into the benefit on both the demand as well as supply side of the trade allowing countries to benefit from the trade with each other. (Smith, 2007) Free Trade & War Free trade is based upon the philosophy of liberalism which believes in freedom at all levels. Liberalism not only advocates the freedom at the individual level but at the society and economy level also wherein it suggests that the economy should be free from any interference of the government. Free trade however, creates economic interdependence between the countries thus making war an unlikely option for the participants. This view is often based upon the overall philosophy underlined in the liberalism and international relations theory which governs the overall relationships of the States with each other.  (Steger, 2002) Considering from the perspective of international relations, liberalism suggests that those states which have mutually beneficial economic relations with each other are less likely to engage in war with each other. This view however, is based upon the assumption that States are not technically unitary actors but rather they are dependent upon each other as long as they depend upon each other economically. States therefore do not operate as single humans but rather as mutually dependent actors whose survival actually depends upon the survival of each other. If the States actually engage into war with each other, their mutual economic dependence may not last for longer. In a globalized world where countries are connected with each other through sophisticated telecommunication networks, this dependence has greatly increased the odds of survival if countries actually cooperate with each other rather than engaging into war with each other.  (Chandra Chari., 2010) In an increasingly mutually beneficial world, there are many competing actors within and at the international level. Further, the presence of institutions such as WTO also creates external actors which are competing and independent of the State. The competing nature of actors within the States actually continues force States to abandon any plans which can instigate war with the countries which are of mutual benefit to the country. (Hawkin, 2004) Free trade can prevent war because very few countries in the world can be considered as self-sufficient and may not require the help of other countries. In a world of comparative advantage, countries depend upon each other even if they are self-sufficient because cost of making goods and services may forces countries to look for other alternative cheaper sources to actually buy these products and services. Such dependence upon each other therefore makes it less likely for the countries to engage in war with each other. (Nester, 2010) In a liberal economy, political resources are considered as the function of the wealth therefore in such an economy and society, State may not engage into actions which can jeopardize the interests of the wealthy. Since wealthy now have global businesses, it may therefore be relatively impossible for the States to actually go against the interests of such global businesses. It is also critical to note that the question of whether free trade avoids the war may be more of the hypothetical question rather than an empirical question. There are many instances where war broke out between the developed nations despite strong trade links with each other. World War I has often been cited as one of the key events in which war broke out between the developed states despite the stronger trade links. Major European countries like Britain, France and Germany have stronger trade links before the War actually broke out. (Barkawi, 2006) There is also another hypothesis which suggests that two countries having McDonalds are less likely to engage into war with each other. There have been few wars between the countries having McDonalds franchise network and it is suggested that it has become relatively costly for both the victor as well as the defeated to actually afford the war and its consequences. (Friedman, 2000) Conclusion Free Trade emerged as a result of the trends towards globalization which advocated more open economies and no or very limited trade barriers. Over the period of time, economic dependence of countries on each other has increased to a greater extent. This increase in economic dependence has been mostly due to free trade between the countries making it less likely for countries to engage into war with each other. A key argument regarding free trade prevents war is based upon liberalism which suggests that in a world of economic inter-dependence it may be difficult for countries to afford the war. The McDonald hypothesis suggests that there are very few countries with McDonald which actually go against each other and wage war. Economic interdependence makes it costly for both the parties to engage into any kind of war. References Barkawi, T. 2006. Globalization and war. Lanham [u.a.]: Rowman & Littlefield. Chanda, N. 2007. Bound together. New Haven: Yale University Press. Chandra Chari. 2010. War, peace and hegemony in a globalized world. London: Routledge. Escobar, P. 2006. Globalistan. Ann Arbor, MI: Nimble Books. Friedman, T. 2000. The Lexus and the olive tree. New York: Farrar, Straus, Giroux.  Hawkin, D. 2004. The twenty-first century confronts its gods. Albany: State University of New York Press. Moore, K. and Lewis, D. 2009. The origins of globalization. New York: Routledge Nester, W. 2010. Globalization, war, and peace in the twenty-first century. New York, NY: Palgrave Macmillan. Smith, C. 2007. International trade and globalisation. Stocksfield: Anforme. Steger, M. 2002. Globalism. Lanham, Md.: Rowman & Littlefield Publishers Read More