The Nature of International Competitiveness - Essay Example

International Competitiveness Depends Fundamentally On There Being Winners And Losers. Discuss. Introduction International competitiveness should lead to a win-win scenario for both developed and developing countries. This could be possible only in the case of implementing a solid fair trade policy. In relation to free trade, Margaret Thatcher's slogan of "There Is No Alternative" (TINA) is very famous. Regarding fair trade, there is also no alternative. Fair trade should be the guiding principle when it comes to international competitiveness. That is the only guarantee of having a win-win scenario that will benefit everyone. If the practice of the current unfair globalisation policies continues there will be winners and losers in the implementation of free trade among nations. The richest countries will become even richer, and the poorest countries will become much poorer. The only solution is fair trade that takes into account cooperation and competition at the same time. The rich countries should cooperate with the poor countries so they can adapt themselves to an ethical globalisation process not only in the economic sense but also in all the dimensions of global integration. Winners and Losers Globalisation is here to stay. The worldwide integration is possible thanks to the technological and scientific advances of human kind. Anup Shah makes the following assertion about the current state of globalisation: "The world is becoming more globalized, there is no doubt about that. While that sounds promising, the current form of globalization, neoliberalism, free trade and open markets are coming under much criticism. The interests of powerful nations and corporations are shaping the terms of world trade." (Shah, 2007). In this global scenario, developing countries should be protected against the greedy interests of the developed countries. Shah states the following remarks that should be taken into account by all interested parties: "Margaret Thatcher's slogan of "there is no alternative" rings sharply. Perhaps there is no alternative for such prosperity for a few, but what about a more equitable and sustainable development for all" (Shah, 2007). Competition and cooperation should go hand in hand regarding global economic integration. Neoliberalism is a nice theory, but putting it into practice is a major problem in today's global world. Global Policy Forum (2007) recognises that the theory behind global economic integration sounds good for everybody, but at the same time everybody should be aware of its shortcomings: "Capitalist economic theory holds that a completely liberalized global market is the most efficient way to foster growth, because each country specializes in producing the goods and services in which it has a comparative advantage. Yet, in practice, cutting trade barriers and opening markets do not necessarily generate development. Rich countries and large corporations dominate the global marketplace and create very unequal relations of power and information. As a result, trade is inherently unequal and poor countries seldom experience rising well-being but increasing unemployment, poverty, and income inequality." (Global Policiy Forum, 2007). S. Matt (2005) points out 8 different positions in relation to the trade debate as follows: "Position 1. The neo-classical story: free trade on the basis of comparative advantage. () Position 2. Free trade but a. Strategic traders & Competitive advantage (). b. Yes to free trade, no to free financial markets. () Position 3. Anti-Free-Trade - traditional arguments. () Position 4. Fair Trade. () Position 5. Yes to trade - no to free trade; Exogenous development; Reform the WTO. () Position 6. Abolish the WTO; Endogenous development. () Position 7. Abolish the WTO; abolish capitalism. () Position 8. Localism - no to trade in general. ()" (Matt, 2005). Positions 4 and 5 should be taken into consideration with great emphasis as they represent solid positions that can help in the economic and human development of poor countries. Anup Shah (2006) provides a general overview of the various criticism of current forms of free trade giving a comprehensive account of the most important weaknesses and strengths of neoliberalism, free trade, open markets, and globalisation. Shah (2006) points out the synergic power of competitiveness and cooperation when it comes to global economic integration. But Shah also addresses the issue of the current form of globalisation hiding new ways of mercantilism in the following terms: "William Appleman Williams describes mercantilism at its zenith: "The world was defined as known and finite, a principle agreed upon by science and theology. Hence the chief way for a nation to promote or achieve its own wealth and happiness was to take them away from some other country."" (Shah, 2006). Shah (2006) also gives the account of growing waves of criticism from former Chief Economist of the World Bank, former Chairman of President Clinton's Council of Economic Advisors, and Nobel Prize winner, Joseph Stiglitz, and Paul Krugman, an economics writer for the New York Times. Shah (2006) states that this wave of criticism has had its positive impact on the policies implemented by the International Monetary Fund (IMF) and the World Bank Shah (2006) asserts that globalisation is a very complex process since many variables should be taken into consideration: "In theory there may indeed be merit to various arguments supporting global integration and cooperation. But politics, corruption, geopolitics, as well as numerous other factors need to be added to economic models, which could prove very difficult." (Shah, 2006). Shah (2006) also quotes Adam Smith as follows in order to show the negative side of competitiveness: "Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their good both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people. (Adam Smith in The Wealth of Nations)." (Shah, 2006). As it can be seen in one of the latest statistical reports by the World Trade Organisation (WTO), the global economy decelerated in 2005: "After reaching a three-decade peak in 2004, global economic growth decelerated in 2005 mainly due to weaker economic activity in Europe, the United States, and a number of emerging markets (e.g. the Republic of Korea, Chinese Taipei, and Brazil)." (World Trade Organisation, 2006). One solution to the unequal competitiveness issue is given by Oxfam, an NGO compromised with spreading the word about the benefits of fair trade through a real reform to the WTO. According to Oxfam (2007a) "Trade can be a powerful engine for poverty reduction. But rigged trade rules and double standards too often mean it now hurts poor people's livelihoods. Oxfam works with organisations around the world to shift global trade rules so they start to work for poor people and communities as well as rich." In this scenario there is a win-win outcome for everybody. The solution is fair trade and a solid reform to the WTO. Oxfam (2007b) works toward achieving the following goals in a world without poverty: "-a sustainable livelihood (the means to earn a reasonable living over many years) -education and health (access to basic services) -life and security (when conflict or natural disasters strike) -a right to be heard (by those who make the decisions that affect their lives) -a right to equity (not to be disadvantaged because of their gender or ethnic identity)." (Oxfam, 2007b). Oxfam's position is very clear when it comes to globalisation and competitiveness: "Trade and investment are essential for development, and the imbalances that characterise and distort global trade and investment rules must be addressed as a matter of urgency. But unequal and exploitative free trade agreements and bilateral investment treaties, which prohibit the very policies developing countries need in order to fight poverty, is no way to put trade and investment at the service of development, or to build a safer, fairer world." (Oxfam, 2007). To reduce poverty through fair trade is not impossible. Competitiveness and cooperation should work together in order to bring equality into the globalisation process. Global economic integration is achievable through a win-win situation for everybody, but there is a prominent need for cooperation from the richer countries in order to accomplish the ethical aims of reducing poverty in the developing and least developed countries. Conclusion If the current form of globalisation continues, there will be a win-lose situation for the poor people in the world. Free trade has to go hand in hand with fair trade. There is no alternative to this solution in order to achieve equality among all stakeholders in the global economic scenario. Self-interest and greed should be channelled into cooperation and compassion for the poor. It is not an easy task, but it is possible to accomplish it through the practice of fair trade as recommended by Oxfam (2007). The benefits of fair trade and a drastic reform of the WTO should favour a more equitable and sustainable development for the poor countries. Competitiveness should be fair among nations. But besides competition, there is a real need for cooperation in order to reduce poverty in those poor countries. In the long run, everybody can benefit of the positive side of globalisation. This scenario is very difficult to accomplish, but it is attainable. It is possible through fair trade and a real reform of WTO. Greed of the developed countries have to be addressed with the right economic policies than can be of great benefit to developing and least developed countries. Bibliography Global Policy Forum. (2007). International Trade and Development. April 11, 2007. . Matt, S. (2005, July 20). Positions In The Trade Debate. April 10th, 2007. . Oxfam. (2007a). Trade Can Be a Powerful Engine for Poverty Reduction. April 11, 2007. . Oxfam. (2007b). How We Work. April 11, 2007. . Oxfam. (2007c, March 20). Signing Away the Future-Summary. April 12, 2007. . Shah, Anup. (2006, March 31). Criticisms of Current Forms of Free Trade. April 11, 2007. . Shah, Anup. (2007, March 5). Free Trade and Globalization. April 11, 2007. . World Trade Organization. (2006). World Trade Developments in 2005. April 12, 2007. . Read More