Introduction to International Political Economy - Essay Example

Economics Table of Content Introduction 3 Discussion 3 Conclusion 6 References 7 Introduction The essay emphasizes the effect of trade on the povertyof nations. In order to attain the answer to the question whether trade is to be considered for poverty of nations, a detailed analysis of the effect of liberalization on an economy has been performed. The influence of internationalization of trade has been analyzed to determine its impact on the quality life of the people within an economy. This has been done to understand whether trade liberalization has been successfully lowering down the inequality of income or boosting it up. To attain the objective of the essay a detailed elaboration has been presented on the major effectiveness of the liberalization of trade on the level of poverty of nations. Discussion With the recent years of globalization, the countries have been able to curtail down borders and accordingly, enhance international trade. This internationalization was initially observed to increase the level of quality living in a nation. Openness and trade liberalization are presently observed to be the key components that lead to the development of an economy. Liberalization of trade is by far identified to be the central source that has been playing a pivotal role to ensure successful economic development. On the contrary, when theorists are elaborating the success of trade for economic development extreme poverty continues to persist1. Globalization has emerged to be the most important factors of the global economy after the Cold War. The globalization has become a defining feature of the global economy in the 21st century and a major source of initiating international integration. However, the world still persists on the basic principles of the national and domestic policies determining the economic affairs of nations. During the last phases of the 20th century, the rapid internationalization became evident with the expansion of the Multinational Corporation (MNC). This forced different national economies to integrate with the international economies globally. Contrarily this even instigated the effect of international economy on the domestic economies of nations2;3. Internationalization of trade has in turn been implying a huge impact on the economic decision making of nations. It has often been observed that the interlinked economic system in this globalized world has often made it difficult for the underdeveloped economy to pace up their growth as well as development with the developed ones. Moreover, the financial crisis experienced in one segment of the global economy creates a huge impact on the others. The financial crisis at the global domain faced during the recent years spread mostly due to the interlinked economic system emerged as a result of the globalization, which has enhanced trade operations amid nations effectively. This meltdown has not only affected the global economy but has also made the domestic economies of different nations suffer as an effect of the global crisis. The evolution in the globalization in the recent past has enhanced the interdependence of nations on each other. However, this interdependence among the nations posed a negative impact on the economic conditions as a whole. The meltdown of economy faced by one end of the globe severely affected the economy of the other end4;5. Trade has been an important factor responsible for the development of internationalization and globalization. Several theorists have also stressed the facts that, different nations have successfully developed their globalized relation by developing trade relations among nations. Trade relation between different nations has also enhanced the level of integration among nations. Trade relations between different nations have been observed to be significance in eradicating poverty within nations. However, in the real domain, trade relations and international trade operations have been enhancing the level of disguised poverty. Various theorists observed that with enhanced globalization, the gap between income distributions is increasing at the domestic level6. Many theorists are of the view that trade relations with different underdeveloped nations have been the leading impoverishment of the developed nations. However, rapid globalization has been broadly viewed to be the reason that has led to the uncertainty of the labor markets7. The recent phenomenon of trade in this globalized world has also enhanced the effect of macroeconomic mismanagements over microeconomic intervention and operation at the domestic level8. However, through various analysis presented by different economists in relation to diverse global economy has made it evident that there were no relevant information that trade liberalization was actually reducing poverty of nations. Trade has been implementing a positive impact on the development of the national income of an economy in the long run. Conversely, the trade liberalization has also been creating an impact of the income distribution within nations9. Correspondingly, in the long run, the tenacious problem of poverty in the developing countries fails to show any positive advance even with the enhanced level of trade relations. Trade liberalization is often criticized to be outward looking development policies, which by no means initiate the domestic development policies related with poverty of nations. Moreover, with the elated level of income inequality caused as a result of trade liberalization has been observed to be a negative impact of trade on poverty elevation in an economy10. Conclusion Trade relation among nations has been observed to be an important consideration for enhancing economic development of a nation in the long run. However, whether trade relations are enhancing the level of poverty reduction is a question that remains unanswered. Moreover, the chances that trade will increase the level of inequality among the nations cannot be nullified. It can also be noted that due to elated level of inequality in income, the level of poverty will be increasing in nations. Trade has been increasing the national income of an economy as a whole. Conversely, individual nations’ mismanagement of the macroeconomic factors can lead to the increase in the level of poverty within such nations. Thus, it can be concluded that although trade is not directly related to poverty in nations, it is capable of improving national income and reducing poverty level to a certain extent. Since trade has been instigating income inequality among nations, the chances of leading such nations into poverty cannot be eliminated completely. References Balaam, D. N. & Veseth, M., 2008. Introduction to International Political Economy. Prentice Hall. Cohen, D., 1998. The Wealth of the World and the Poverty of Nations. MIT Press. Gilpin, R., 2001. Global Political Economy: Understanding the International Economic Order. Princeton University Press. Roemer, M. & Gugerty, M. K., 1997. Does Economic Growth Reduce Poverty? Technical Paper, pp. 1-33. OBrien, R. & Williams, M., 2013. Global Political Economy: Evolution and Dynamics. Palgrave Macmillan. Ravenhill, J., 2011. Global Political Economy. Oxford University Press. The Woodrow Wilson International Center for Scholars, 2005. The Impact of Trade Liberalization on Poverty. Summary of Proceedings from a Conference. [Online] Available at: http://www.wilsoncenter.org/sites/default/files/ImpactofTrade_low.pdf [Accessed August 25, 2014] Thirlwall, A. P., 2008. Trade Liberalization and the Poverty of Nations. Edward Elgar Publishing. Winters, L. A., No Date. Trade and Poverty: Is There a Connection? Introduction, pp. 1-26. Read More