The Growth of Global Integration - World Trade Organization - Coursework Example

Essay Topic No. 1 A Critical Analysis Name of Student: Student No: Date: Name of Supervisor: Introduction We cannot refuse to participate in global markets if we want to prosper’. This statement will be the subject of the essay. We shall attempt to critically analyse this statement from the viewpoint that economic prosperity is predicated on further economic liberalisation and integration. The dynamism of the universal contemporary fiscal order are as critical for the economy of the world and international relations as we get further and further away from the Cold War. Integration of the global economy is accelerating, motivated by increasing commerce and capital flows, expanding financial markets, a drop in cost of transportation, and the revolution in information and communications technology (European Commission, 2006). This means that opportunities for growth and development are growing but the impact on natural resources is to cause strain on them, especially as pertains to climate as wall as conventional industries and sources of revenue. This has resulted in the erosion of old certainties and the awakening of new fears. The response to these changes from the corporate world has included utilisation of advanced technologies as well as foreign capital and pooling from the growing force of educated labour in the developing world. There has been a shift in global supply chains as firms outsource intricate services and manufacturing to economies where it costs less to set up. The parts that go into manufacturing a single product might be obtained from several different countries and this has taken the place of the conventional commerce in finished products (European Commission, 2006). The opportunities that globalisation brings are being taken up more and more by countries and in the latter part of the twentieth century, the global economy was driven by Japan, Europe and the United States. These three jurisdictions have been joined in this century by other open and expanding economies such as India and China as well as Brazil, Russia and other countries. China has attained the position of third largest exporter is the second largest national economy after the United States. India is the sixth largest. This has resulted in changes to the nature of global commerce (European Commission, 2006). The proliferation of tariffs is steadily reducing over time and in the case of Europe, the measure of competitiveness is the innovation, knowledge, intellectual property, services and use of resources efficiently. There needs to be adaptation of trade policy and the entire perspective employed toward international competitiveness. Globalisation is a ubiquitous term used to explain or describe several global phenomena. Perspective on globalisation depends on the viewpoint in question. Proponents point out its advantages in eliciting greater economic integration across national borders, while opponents are afraid that it will be a threat to social cohesion and lead to development of unregulated capitalism that will cut the legs out of the Welfare State (United Nations World Public Sector Report, 2001). The motivation for increased global interdependence is four fold: Trade and investment liberalisation Technological innovation and lowering of the cost of communication. Entrepreneurship Global social networks Many are of the view that the main forces behind globalisation are innovation in technology and entrepreneurship but these two factors are not able to solely explain the process of the enhancement of economic integration. There has been a pivotal role played by national governments in facilitating a higher level of interdependence and economic assimilation particularly in regard to activities that elaborate and adopt market-oriented policies and regulations. This takes place both at international and local levels (Bertucci and Alberti, 2002). The growth of global integration began to coalesce in the 1980s with governmental support from many jurisdictions for economic liberalisation. This has entailed financial sector deregulation, decontrolling foreign exchange and increased freedom of trade. Financial deregulation has led to the progressive eradication of capital controls, elimination of control over interest rates as well as removing conventional barriers to entry into fiscal services including banking (Cable, 1995; 3) The efforts of states to bolster free trade and promote the minimisation of trade barriers have been demonstrated in the eight consecutive negotiating rounds of the former General Agreement on Trade and Tariffs (GATT) which concluded in 1995 with the inception of a multilateral trading system known as the World Trade Organisation (WTO). This organisation has been responsible not only for the reduction of trade barriers to sale of goods but also the liberalisation of services and capital flows. The WTO has also honed in on the increasingly growing plethora of policy measures which affect the terms and conditions of market access including standards and regulations, subsidy practises and intellectual property rights (WTO, 1998). This indicates that contrary to popular opinion globalisation does not take place blindly. It is ultimately the individual governments who come up with policies and rules for a globalised economy. This means that economic globalisation is as a result of policy decisions brought about by individual countries that facilitate the global market forces in their operations. It is critical to emphasise the political source of economic globalisation so as to escape the interpretation of this phenomenon as a deterministic entity which is unavoidable (Bertucci & Alberti, 2002). The pertinent issue is the composition of countries which set the rules, which ones they favour and how those with less power can affect the international policy-making in a way that benefits them. The leverage that countries hold in setting the international agenda both economically and politically differs according to the power each holds and the imbalances that characterise these relationships reflected in international institutions. Consequently, globalisation in its present form is informed by rules set up by the most influential part of the world and these rules do not necessarily favour countries in transition or developing countries. The Bangkok Declaration of February 2000 describes globalisation as a powerful and dynamic force for growth and development. Should it be managed with care and based on an enduring and equitable growth on an international level (UNCTAD X, 2000). Although governments have been instrumental in facilitating growth of integration in some areas, the further global interdependence has been driven by technological innovation and the increasingly reduced outlay in transport and communication. All of these factors have helped to considerably change the speed, quantity, ease and quality of international information flows in addition to physical communications (Cable, 1995). Multimedia communications and information technology in particular has elicited contraction of distance and speeding up of change. The last seven decades have produced technological advances as well as reduced transportation and communication costs. This sharp reduction in communication costs can also be attributed to the end of state monopolies and the resulting greater competition in the telecommunication sector (Bertucci and Alberti, 2002). Two key developments hastened the development of globalisation of flow of information in t nineties. The first was the proliferation of computers into millions of households. The second was the growth and development of internet technology. The first development signalled the change in the role of the computer, which became not only an instrument for the government use and utilisation by business entities but also a household electronic appliance used to retrieve and process information, for entertainment or education as well as communication. The second has resulted in humanity making a great lead in technical access, interpretation and utilisation of information. By March 2000, the estimate of personal computers worldwide was 400 million while there were a billion telephones in use. The number of internet users was pegged at 276 million and this number had an estimated daily growth rate of 150,000 persons per day; there were 220 million devices that accessed the Internet with an estimated daily growth rate of 200,000 devices. In 1996 the word bandwidth totalled 200 trillion bits per second and this figure was estimated to have reached 1 billion personal computers and three billion telephones in 2012. These technological innovations as well as increased economic liberalisation have been utilised by entrepreneurs and multinationals in expanding open markets worldwide with emphasis on manufacturing processes (WTO, 1999). With the opening up of opportunities in different economies, the path is laid open for foreign capital, technology and market to make its way to host country commerce mainly from transnational corporations. As national economies open, there comes about proliferation of mergers between different commercial entities from different countries together with buy- ins or investment in business equity from foreign investors. Transnational corporations are not a new phenomenon in the economic sector but there has been a shift in their operations worldwide and the amount of economic power they hold as a result of globalisation (Commission on Global Governance Report, 1995). Critical Analysis The statement, ‘We cannot refuse to participate in global markets if we want to prosper’ is the subject of the essay. In order to critically analyse this statement from the viewpoint that economic prosperity is predicated on further economic liberalisation and integration it was necessary to outline the various aspects of globalisation that have taken over the world in the last half century or so. We have seen that information technology has been an instrument that has shrunk the world into a global village that, along with reduced cost of transport and communication has meant that it is possible to manufacture goods in China using goods sourced from Africa and South America and sell the goods in Europe and America with ease and speed. The shift of commodities from tangible goods to intellectual property, knowledge and skills also means that people can live in one continent while working on another, through the auspices of information technology. For example, an IT specialist dealing with computer technology can develop software programmes from anywhere in the world and sell it on the world wide market. This means that failure to participate in this global economy would mean that citizens of a country would lock themselves out of the opportunities that are afforded by this participation including job opportunities and access to knowledge and skills which inform these relationships. Countries may also find themselves at a disadvantage in the attempt to participate in import and export of goods. Due to bilateral agreements and trading blocs which offer advantages to members in terms of waiver of tariffs or travel restrictions, any country that excluded themselves from these agreements and did not participate in the general global commercial market would find themselves priced out of the market. Countries would prefer to obtain their goods from areas in which they garner some sort of advantage in terms of lower prices or quality of goods. In order to keep up with the ever changing nature of knowledge and skills and therefore be at the forefront of innovation and maintain a competitive edge, each country would need to have a solid foot in the global market. In terms of information technology, there are constant changes that take place almost on a daily basis and new technology becomes available in frequent cycles. As more and more of the world’s economy outsource goods and services to trading partners and as the world becomes a smaller and smaller place, it is mandatory for every country to participate in global markets if they wish to stay afloat. Conclusion As has been observed, the world is a global village and what takes place in one part of the world can have a domino effect on the rest of the world. The global crisis that began in the United States ultimately affected the entire world. It is therefore not possible to remove oneself as a country from the happenings of the rest of the world. Even as a closed economy, a country is in need of goods and/or services from other regions and therefore they must participate in trade. In doing so, they would wish to secure the best terms possible for their goods and services and this would lead to them seeking to enter into bilateral agreements and so on. Therefore, the statement that ‘We cannot refuse to participate in global markets if we want to prosper’ is certainly valid. References Bertucci, G & Alberti, A. (2002). Globalization and the Role of the State: Challenges and Perspectives. Cable, Vincent. (1995). “What Future for the State”, in Deadalus, March 22 Commission on Global Governance Report. (1995). Our Global Neighbourhood, Oxford University Press, Oxford. United Nations Conference on Trade and Development. (2000). Tenth session, Bangkok Declaration, Global Dialogue and Dynamic Engagement. United Nations. (2001). United Nations World Public Sector Report 2001 on “Globalization and the State” World Trade Organization. (1998). Annual Report, Geneva. World Trade Organization. (1999). Annual Report, Geneva. Read More