Hindering Economic Development in Developing Nations - Essay Example

Do international institutions such as the WTO and the OECD help or hinder economic development in developing nations? Name Institutional Affiliation Instructor Date As globalization process continues, the world is beginning to look like a single community with a common culture, knowledge and shared economy. However, the impacts of globalization do not necessarily lead to positive results. For example, the United States’ subprime mortgage crisis has pushed the whole world into a complex economic recession. The crisis does not only show how the world economy has become closely integrated, but also expresses the importance and necessity of having a legal system that can promote global and harmonious prosperity. This is why international organizations/bodies have been formed to oversee the nature of economic growth in developing and developed countries. This paper will discuss ways in which international institutions like the World Trade Organization WTO and the Organization for Economic Co-operation and Development OECD have helped in economic development and growth in developing countries. The major problem witnessed in the modern age is the growing rift of economic disparities between the developing and developed nations. The WTO is responsible for the amelioration of the investment and trade conditions. However, the institution is faced with the problem of how to better integrate developing nations and their particular concern into its work. This is a matter of urgency given the fact that the two- thirds of the WTO membership is made up of developing countries. The WTO has been in the fore front championing fast development of trade in less developed countries. On the other hand, developing nations have a role to play in WTO given that the countries have gained political recognition over the recent years and their corresponding majority of membership (Macrory et al., 2005). The WTO has been vital in facilitating trade liberalization hence economic development of developing nations. Developing countries benefit from trade liberalization just as the developed nations given the liberalization process takes place within the context of internationally agreed rules. The WTO, therefore, is called for exceptional attention to the unindustrialized nations to increase investment and trade as well as a common initiative that bind the developing nations. Setting up of the Special and Differentia Treatment provisions S&D, for developing countries further boost the economic growth of developing countries. During the first Ministerial Conference in 1996, the WTO adopted various declarations which supported the growth of and development of economy of developing countries. Among the declarations adopted include the integration of developing nations in the bilateral trading system, improvement of the accessibility of the basic technical assistance and the likely negative impacts of agricultural reform programs especially on least-industrialized as well as net-food importing developing nations (Yeats, 1979). Through subsequent Ministerial Conferences, the institution has managed to declare an action plan which involves the incorporation integrated trade frameworks and assistance to developing countries, provision of market information and access to reliable and competitive markets in product sections of developing nations, e.g., textile and agricultural products (World Bank, 2003). Other declarations of WTO in respect to developing nations touch on the provision of additional special and differential treatments which benefit the least-developed countries. Also adopted is the provision of reliable technical assistance which will help boost the potentiality of developing nations to put into full implementation the obligations of WTO. The WTO and OECD work together towards the achievement of common goals of steady economic growth and development within developing nations (Reinert, et al., 2009). The two international institutions enhance market access by developing countries through trade in goods, investments and trade in services. For the trade in goods, the initial formulation of the General System of Tariff Preferences based on the needs and wishes of the developed nations. However, the reforms made by the World Trade Organization means that the General System of Tariff Preferences will be formulated after a critical evaluation of the needs and wishes of developing countries. The institutions are concerned with reduction of trade barriers, specifically in products which are of great interest to the developing nations. The barriers are a big hindrance to effective economic development in least-developed countries. Through the General Agreement on Trade in Service GATS, the WTO enhances market opportunities for developing nations. This implies that there are better export opportunities for the least-developed countries in the future, for example participation in consulting services for tourism and enterprise, leisure, sports and cultural services (Alexander & Andenæs, 2008). International institutions have also promoted economic growth and development by giving companies and workers in developing nations the chance of collaboration with the Foreign Service industry. In return, the workers and companies from developing countries benefits from technology and expertise from the Foreign Services, hence use the acquired technology and expertise to improve the economic growth in the developing countries. The provisions of WTO under the GATS also facilitate service delivery by people living in developing nations by minimizing the domestic regulatory barriers affecting efficient delivery of services in developing countries (Alexander & Andenæs, 2008). Although the WTO Agreements on investments are not yet clear, necessity may arise in the future. The availability of standardized rules of investment on a global platform reduces investment abuse and stimulates the required investment and general economic growth in the developing countries. According to the Organisation for Economic Co-operation and Development (2002), there is a massive body of evidence suggesting that there are outstanding links between economic performance and openness to trade which is significant for attaining sustained poverty eradication. The achievement is evident in developing nations which have gained success form expansions of the global markets. Firm reduction in trade barriers, specifically in manufactured goods, has helped countries to integrate quickly into the global markets via an export-propelled industrialization process, and hence share in the affluence of generated globalization. However, the enhancement of global markets access and opening up of trade regimes is not often enough to allow developing countries to engage and garner all possible benefits of trade liberalization. Developing countries require the help of international institutions such as OCED and WTO in order to develop trade-related competence if they are to gain (Babkina, 2000). Without these institutional structures, there is no doubt that global trade could have been unbalanced and the developing countries could be at the losing end. The role of OECD in trade is to support a strong multilateral trading system which is based on rules and maintain the pace at which liberalization takes place. It is responsible for the strengthening trade dialogues with developing as well as emerging economies. It also increases the knowledge of the impacts of trade liberalization and helps in promotion of mutually beneficial economic integration (Lovei & Weiss, 1998). However, it is not enough to open the economies of developing countries to the international trade. Developing countries can only realize the benefits of trade liberalization if they have efficient and reliable infrastructures that link them to producers at local grounds to the domestic, regional as well as the global markets. In the process, a regulatory environment is necessary for vibrant economic activities to take place. This is where the international institutions amongst them WTO and OCED comes in. These institutions help developing countries by ensuring the implementation of policies that protects developing nations from exploitation, provision of information, procedures and sufficient infrastructure effective competition in the global markets. Against the economic backdrops, the international community, through the international institutions, has been able to improve and expand aid for trade. The trade aid is meant to help low-income nations overcome obstacles that prevent their ability to gain from the expansion of trade. The aid is also aimed at promoting stronger impacts of trade on poverty eradication and economic growth and development in developing countries (Davey, 2012). The global Aid-for- Trade is an initiative by OCED that interlocks trade policies and aid in pursuit of improving the living standards of people especially in developing nations. It is aim is to complement the various trade reforms at the same time promoting equitable distribution of global gains within developing nations. OCED is designed in a way that it ensures the intended benefits of any trade policy materialize (Chen, 2003). In summary, the formation of international institutions helps in the economic growth and development of developing nations. However, there is no guarantee for smooth working relationship with such institutions as negative things are likely to appear. In my view, however, there is need for the developing nations to have a strong endeavour of bringing in changes in negotiation processes with institutions like WTO in order to create more transparency as well as greater participation of developing nations in the negotiation process. Developing nations should deliberate on the issue by making specific proposals requesting an improvement in negotiations with the World Trade Organization. The agreements and the operations of the WTO are and will continue to have profound effect on the economies of the developing nations. Therefore, it is of the essence to have such international organizations as the economic stability of unindustrialized nations requires support from such institutions. Ideally, the developing nations should identify their specific objectives and interests in respect of the framework of the World Trade organization, Organization for Co-operation for Economic Development, and relation institutions. This can be achieved through a broad-based process and critical examination of issues and their implications, as nearly every matter that is of interest to the WTO involves divergent interests. References Alexander, K., & Andenæs, T. (2008). The World Trade Organization and trade in services. Leiden, Martinus Nijhoff Publishers. Babkina, M. (2000). World Trade Organization: issues and bibliography. Huntington, NY, Nova Science Publ. Chen, J.-R. (2003). The role of international institutions in globalisation: the challenges of reform. Northampton, MA, Edward Elgar. Davey, W. J. (2012). Non-discrimination in the World Trade Organization: the rules and exceptions. The Hague, Hague Academy of International Law. Lovei, M., & Weiss, C. (1998). Environmental management and institutions in OECD countries: lessons from experience. Washington, D.C., World Bank. Macrory, J., Appleton, E., & Plummer, G. (2005). The World Trade Organization legal, economic and political analysis. 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