How Globalization Has Affected Trade? - Essay Sample

Introduction

To begin with, Globalization is the new trend that is currently leading the world. It explains the global change towards investment across borders and the free movement of trade which result in incorporations of economies (Robertson &World Bank, 18). Surprisingly, globalization not only improves individual's livelihood but also heaves the level of production. It increases economic competition and expands economic freedom among nations. It makes the world appear in a global market setting. It offers unlimited access to international money to less developed countries. This paper details the effects globalization has on international trade.

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Globalization enhances the selling of highly developed abilities and goods overseas. It destroys the monopoly of unskilled protected domestic entrepreneurs dominating the economy. It encourages a higher standard of living by reducing poverty and promoting the exchange of goods at a higher rate. Globalization brings people together in the process of choosing between various commodities. Thus, trade and globalization have rewarded prosperity to Billions and have enhanced many nations' statuses. According to Hall, 2018, globalization as processes in which all the people in the world are integrated into a single global society. Another definition is that of Cox, 1994, where globalization is the trend involving a more aggressive distribution of products internationally making states agencies of the globalized world" (Kuepper, 125).

Trade itself began even before the idea of globalization came about. Economic trade is the interaction among various countries involving the exchange of services and goods that is, imports and exports. When different products are brought in, it is known as imports and when goods are taken out, they are exports. Harrison, 13, defines trade as buying and selling of goods for money's worth. Global business is the exchange of capital and different goods across state boundaries. Currently, the primary source of economic revenue for every country is international trade. Countries would always be limited to their own products if international trade would not exist. The basis of this trade has still been to maximize benefits from comparative advantages.

States participate in commerce in order to grow their economies. They enhance this by taxing all imported goods and putting restrictions. This is a way of protecting their local assets and making their commodities more valuable. Many countries export their goods because of surplus and others import because of scarcity or not manufacturing some products hence they acquire them from other nations. In the end, this creates monetary benefits. In other cases, some governments subsidize exporting products so that they become cheaper for the countries importing hence products become of interest to them.

Evidently, International trade thus makes distribution of resources even. States are able to specialize on the products they can efficiently manufacture. International trade enables people to acquire products that are difficult to get in their own country or neighboring countries hence from a nation at the far end they can obtain what they otherwise might not have. For instance, UK produces cheese, but through international trade, French counties are able to consume cheese too (Harrison, 65).

Globalization has led to international trade achieving a comparative advantage. This is the varying of products prices between countries. A country does not have to be particularly productive to export its goods. Thus, a country will only ship those products that appear expensive unlike those bought cheaply back at home. Countries prefer to ship products with a comparative advantage and trade some of the products for others of better quality. Countries tend to efficiently utilize and allocate the variety of goods available from comparative advantage. This helps to avoid inefficient goods from poor productions completely.

This helps states to build marketing supremacy since they can avoid poor production that leads to releasing of toxic gases in the atmosphere that are hazardous to living things. Countries can implement better methods of production through international trade. This is because the best quality of goods is produced hence attracting a massive number of customers unlike poor means of production that produce poor quality goods attracting few buyers. With this, the motivation to deliver efficiently improves. Not only does better production method improve but also the quality of a good. As the market for products increases, job spaces are enhanced. More and more industries are set up to satisfy the demand for goods. A country redundancy ratio reduces as more people are put to work, and with this, the livelihood of a people improves significantly.

However, trade liberalization reduces non-tariff and tariff trade limits hence facilitating the importation of capital goods. Economic growth increases because the higher import of capital goods boosts industrialization which attracts employment and production of a variety of goods. Less-developed economies consider the foreign direct investment a blessing. Where trade is liberalized, it raises incomes and fuels fast growth. Liberalization leads to generation of profits for administrators which they allocate for other uses (Stieglitz, 2007). The emergence of global trade has not only increased production of goods but also state profits which have enhanced the productivity of a country. Conversely, competition between foreign manufacturers and local manufacturers has shot up in the international marketplace. With this economic growth, efficiency and productivity have increased since competition promotes this indirectly. Many countries take advantage and start producing a particular product after they have observed how it is profitable. This helps healthy competition among member countries of international trade associations. This process has not only led to an increase in a variety of goods to choose from but also has made way for people to utilize new technological systems and share ideas.

A study by UNCTAD in 2005 showed that global free trade provides for developing nations about $300 Billion annually and lifts about five hundred million people from poverty. This is through global trade providing benefits to the needy who need them the most. The widespread of free trade, economic control, and markets reduces the authoritative power of the rich and shun them from embezzling the weak ones' resources. Free trade, in line with globalization, has supported and empowered people to democratic development. Rather than relying on a government controlled on the flow of goods and services, people have placed their trust on what Adam Smith stated as "Natural system of liberty." This stimulates innovative minds, empowers people and stimulates creativity (Melber, 2013).

States like Mexico, Taiwan and Korea, are endorsed partly because of prosperity and economic growth due to globalization. Therefore, International trade leads to stronger bonds between Nations and establishes interdependence. In the end, countries have become dependent on each other. Because of the history and achievement trade has enhanced, it has shown it's the only way for human beings to develop and survive. As much as several nations have achieved through this, globalization and trade have led to retaliation in different countries. This is from other foreign economies where they put import controls on goods hence end up becoming highly priced causing inflation. International trade has led to the diminishing of infant industries. These small industries find it had to keep in pace with them due to exorbitant cost of operation.

Overspecialization brought about by globalization in international trade might become too much to a point where certain goods will become scarce now that they are not being produced. If imports become more than the exports, the balance of payment ends up becoming less hence damaging the economy in the home country. If many nations as well rely on excess importation of goods, there will be an imbalance in trade, and too much of this decreases the economic scale. In the real world, unlike in theory, several factors affect international trade hence affecting the flow of trade. For instance, many nations deny associating in the trade with countries that threaten them in war.

For example, USA had restricted citizens importing goods from South Korea and Cuba because of their behavior during the cold fight. This is known as trade Embargo, an action that manipulates a society behavior any time it had engaged in a war. This action is mostly applied when a nation becomes actively involved in both importing and exporting activities with other countries. Some researchers argue that industrialized countries should stop participating in trade with developing nations because industrialized nations benefit more from the trade. This widens the gap between the developed nation's economies with those of developing countries (Raymond, Drusilla & Gaelle, 145).

Moreover, the International Labor Organization is against international trade, and in years to come, it will enforce strict regulations upon trade between third world countries and industrialized countries. It is also interested in stopping developed nations from getting cheap labor from the less developed nations and developing nations. International Labor Organization finds it uncouth concerning the exploitation. Subsidies and tariffs make services and goods expensive for consumers hence it is essential if the government would do away with this regulations since they knock economic growth.

Globalization comprising of economic, political and social processes is enhances success in international trade and regionalism, multinational companies and investments, global finance and money circulation. While globalization activities reduced and taking over of the national government in the economy. On the other hand, the national economies are trying to keep pace with the drastic economic changes by newly controlling their international trade restrictions through commercial integrations and regional trade laws.

Based on this statement of how globalization has liberated trade, the study investigated the balance of trade in counties belonging to BSEC, The Black Sea Economic Cooperation Organization. The data was fetched from globalization index of KOF Swiss Economic Institute and database of UNCTAD. The knowledge is evaluated using a sheet data analysis and the outcome has shown it is true that globalization has a noteworthy effect on international business and it has a constructive effect on the freeing process of trade on the countries that subscribe to BSEC (Hall, 2017).

The economic feature of globalization refers to the growing ties between world economies due to growth in cross-border exchange of services and commodities, rapid distribution of technologies and the flow of capital from worldwide countries. It shows the mutual incorporation and continuing expansion of market frontiers, and it is an irreversible occurrence in economic development worldwide at the starting of another millennium. As it turns out, global trade flow from this process significantly and everyone was observing.

According to various data, merchandise increased by 10% a year and the other millennium by 15%. World-wide the percentage increased to 20. As much it is appealing when involving all countries, individually, some countries registered unpleasing figures of merchandise. This is because of the complex globalization process that resulted in national governments losing control over their trade and economy. The federal government focused mostly on the changing marketplace by liberalizing their international trade obstacles through economic int...