International Production and Trade - Essay Example

As a result of this shift, the United States and much of Western Europe aligned itself with a free market capitalist system whereas the Soviet Union and many parts of the remainder of the world aligned themselves with socialist communism. As a result of this bipolar powershift, the capitalist nations throughout the world realize that one of the only ways to ensure that wealth generation and sustained growth could proliferate was by engaging in a system of capitalism that prized reductions in trade barriers and liberalize nations in trade.

The authors further specify the fact that this desire to reduce trade barriers and liberalize trade was ultimately the impetus which helps to give rise to such global entities as GATT, WTO, and the World Bank. Yet rather than each and every nation throughout the world integrating their economies and seeking to provide goods and services with little to no trade barriers, a somewhat different dynamic has been realized. As such, the difference between theory and practice is denoted by the authors with respect to the way in which different trade blocs and trade alliances have developed between the regions and entities throughout the globe.

As such, whereas the world might have been previously defined based upon religion and/or ideology, nationality, ethnicity, or any other litany of different qualifiers, the modern world has largely been defined with regards to which nations agreed to a level of unimpeded trade. What this has ultimately affected is a situation through which the world has come to be redefined based upon trade and not based upon many of the other qualifications that had previously constrained and defined the way in which nations have interacted historically.

After the collapse of the Soviet Union, this particular trend has only been increasing as more and more nations throughout the globe seek to develop their own trade blocs and alliances in something of a macro form of protectionism. Evidence of this can of course be seen with regards to the way in which the EU, NAFTA, and ASEAN treaties now exists which helped to promote trans regional trade and block the advances of true international liberalism that might otherwise helped to differentiate and grow these respective economies.

As a result of this particular approach, the authors discuss the way in which this dynamic shift has encouraged specialization with regards to different industries and regions/economies. Moreover, as well has been generated and regions of the world have come to supply the raw material for finished goods and services in other parts of the world, the authors note the fact that many individuals view this as something of a neo-mercantilist system. Although this is not quite the case, the comparisons are nonetheless existence and should not be dismissed out of hand.

As the more wealthy nations, represented by powerful trade alliances and blocs are able to outsource their unskilled labor and raw material extraction to poorer nations, the benefits of these inputs are realized on both entities. Whereas the neo-mercantilist would point to the fact that these nations are being taken advantage