International Production and Trade - Essay Example

The author in the chapter sought to identify the basic features and issues forming the international production and trade structure. While discussing the changes taking place in the production of goods, the author uses the case of Thomas Friedman to explain the post-world war II changes that have taken place. Technology is arguably one of the most significant steps that man has discovered so far. As such, it has revolutionized both the production process and the communication channel. While the internet connects people in a previously un-imaginable way, new products such as cars and clothes go through mass production.

Another notable change in the production process is the level of fragmentation and specialization taking place. With the increased level of interdependence between different countries and regions around the world, production methods have spread in all parts of the globe. Statically, the World Bank demonstrated the effects of this growth and increase in production through the 2005 world’s gross domestic product, which was approximately $44.3 trillion. Of this, 78% came from the developed countries, while the middle and low income, countries contributed only 22 percent.

Five years earlier, the level of production was fives lower as it was in 2005. McGrew, an expert observes that there have been changes in the trends of FDIs, which have subsequently contributed to the capital mobility. In this mobility, firms now migrate from the industrialized countries and set up production plants in less developed countries due to labor issues as well as environmental issues. International trade, which is trade that takes place between different countries, help in the unification of countries.

Since trade ties countries together, it generates significant political, economic, as well as social interdependence between countries. As such, many states use it as a means of gathering income, opting to regulate it in an effort to safeguard their interests. The international trade structure, by pulling international leaders, IO and the NGO officials, pulls three perspectives of trade at the same time. Despite their conflicting arguments, these perspectives have contributed to the understanding of the development of trade in the international front.

International trade rules came into effect in the sixteenth through the eighteenth centuries. Tariffs and quotas existed back then, as there was a restriction of importing intermediate goods. This aimed at protecting local industries from unfair competition. One of the international trade policies launched in the eighteenth century advocated for a laissez-faire type of policies. Proposed by Adman Smith and David Ricardo, the liberal trade policy still applies in the case of the Britain markets.

These were the developers of the comparative theory, which advocated for opportunity cost of production. Proponents of opportunity cost theory pointed out that for a country to produce a particular commodity; it had to forego a particular commodity that was rather expensive to produce. As such, introducing trade restrictions was an unjust way of treating other nations. However, the mercantilists challenge the arguments of comparative advantage, even currently. They argue that states can