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Globalisation of Trade

In a new effort to solve world problems, many world leaders are recommending globalisation which is the great economic event of our era. Economic
globalisation is now bringing unprecedented opportunities to billions of people throughout the world. People on earth now see themselves as people of one large family. However, this new epoch offers new challenges and new global problems. Therefore, in this unit, we shall examine the concept of trade globalisation and its implications.

What is Globalisation of Trade?

Trade globalisation is the term used to describe the growing worldwide international trade. It is a new economic effort to solve world trade problems by integrating countries world-wide into one large trading family. This world trade integration offers enormous potential to improve trade among nation states.

Conditions of Global Trade Arrangement

1. Liberalisation of trade through the reduction of barrier to trade.
2. Reduction and harmonisation of tariffs.
3. Production of high quality goods that must be competing on a global scale.
4. Common economic policy concept for one world.
5. Provision of aviation facilities to internationally acceptable standards.
6. Removal of technical barriers.
7. Provision of information technology facilities like internet, television, telephone and microchip.
8. Upgrading of insurance products to international standard.

Benefits of Trade Globalisation

1. Expansion of world trade in goods and services.
2. Global trade encourages optimal use of the world’s resources.
3. Minimisation of externalities, especially barriers, thus making it less costly for nations to engage in international trade.
4. Improvement of welfare arising from increased global output from specialisation and competition.
5. Global trade will increase integration of goods and labour markets across the globe.
6. The global trade will improve living standard of the people and global prosperity. It has enormous potential to eradicate poverty in the 21st century.
7. The interchange of trade ideas is an important feature of trade globalisation.
8. It will make countries more reluctant to go to war.

Harmful Implications of Globalisation of Trade

1. Global trade protects the interests of the developed countries to the detriment of less developed countries. The developing economies that are largely uncompetitive in the global trade see globalisation as evil, and a mechanism for their exploitation.
2. The system of trade liberalisation is anti-developing economies, since the benefits are not shared equally between the rich and poor countries.
3. Trade Globalisation has also favoured the growth of rich multi-national companies that have practically taken over the order market for certain products.
4. Trade globalisation has been fueled by market forces that have much more interest in profits than the protection of the planet.

Like many of mankind’s projects, globalisation of trade has proved both useful and harmful. It has brought economic advantages to some and has ushered in an era of global trade communication. Nevertheless, it favours the rich countries over the poor ones. Therefore, if trade globalisation is to succeed, it must benefit both poor and rich countries alike.