The globalization of international trade
Description:
After the 1970s, international trade including goods and services between countries, experienced a notable growth. The volume of exchanged goods and services between nations is taking significant part in the generation of wealth. By 2003, international trade was accounting for about 15% of the global GDP, a twofold increase since 1950.
Enablers:
- The more flexible and embedded production systems encourages exchanges of commodities and services.
- Transport costs declined greatly due to the innovation processes and a growth of the efficiency of modes and infrastructures. As a result, the transferability of commodities has improved.
- Integration processes such as the emergence of economic blocks and the decrease of tariffs at a global scale, promoted trade. The higher the level of economic integration, the more likely the concerned elements are to trade. The transactional capacity is consequently facilitated with the development of transportation networks and the adjustment of trade flows that follows increased integration.
Inhibitors:
- The fear of too specialized and unfairness of the local governments may lead them to legislate laws preventing international trade.
- High tariffs, quotas, and other public policy interventions.
Paradigms:
- The World Trade Organization (WTO) operates with the broad goal of reducing or abolishing international trade barriers, which can largely increase the international trade.