International Economic Essay

Globalization process refers to the worldwide incorporation of economic, cultural, political as well as religious and social arrangements. There are other definitions with the IMF referring it as the growing economic interdependence of nations globally through improving quantity and range of inter-country trade, free international capital flows and extensive widespread of technological knowledge. Economically, it’s defined as the union of prices, products, wages as well as interest rates and margins to fit in the developed countries standards. Globalization has various advantages such as appearance of global production, markets as well as wider access to a variety of internationally produced goods for consumers and producers. Secondly, there is emergence of international economic markets and greater access to external funds for; local, national and other borrowers. Thirdly, it’s economically beneficial in that there is recognition of an international common market depending on the autonomous exchange of commodities between nations. Fourthly, there is a formation of world political government that maintains the relationship between nations and ensures the freedom arising from social and economic internationalization. In addition, there is a greater information flows between different countries hence enhancing communication, while encouraging intercultural contacts and adoption of other cultural ideas hence promoting the adoption of new technology and practices therefore encouraging unity and harmony. Finally, it encourages global cooperation which assists in solving environmental challenges such as water and air pollution, over fishing of the seas and climate change. Similarly, it encourages health competition between nations and industries hence ensuring efficiency and effectiveness in the production of commodities. This ensures that goods produced are of high quality and charged fairly. This ensures that consumers are not exploited by producers who may produce counterfeit goods and charge high prices. In the wake of internationalization, productivity is essential so as to meet the international demand for goods and services and remain competitive in the world market. At the same time, nations which experience economic growth are fairly placed and their commodities are highly demanded in the world market. It also ensures that can trade with others effectively and efficiently by meeting the required standards as they can afford the current technology and production techniques. Tariffs refers to a tax on foreign goods once they are imported i. e. immediately on arrival at the port, the custom officer examines the goods and imposes a levy as per the custom formula. There are various types of tariffs such as: an ad valorem tariff which is a percentage of the value of a commodity while specific tariff is charged on a commodity as per its weight, volume or surface, but not to its value. It shows many units of a currency are charged per amount or area. There is also a revenue tariff that refers to a group of levies imposed mainly to raise income for the government while protective tariff is mainly imposed to temporarily raise the prices of imports while protecting the local or domestic industries from foreign competition and dumping of unwanted commodities or imports. However, they raise the price of a commodity as per the imposed levy, hence exploiting the consumers of the good or manufacturers who utilize as a raw material, at the same time ii can lead to trade war when it doesn’t favor the imposing country. Trade blocks are formed to minimize or eliminate tariffs against trade with each other and impose protective tariffs on imports outside the block, while custom union has a common external tariff as per agreed strategy; the member countries divide the revenue from the tariff on commodities entering the union among themselves. Economic theories argue that tariffs are unnecessary disruption of consumers’ sovereignty and the rule of free market. They argue that it is unjust to the consumers and generally unfavorable for a nation to protect a non performing industry, it’s healthier to let it collapse and give way a new efficient one to grow in its position. Others claim that protective tariffs that assist in protecting infant industries permit them to develop and withstand competition in the international trade once they expand their size. Similarly, tariffs can be used as a political tool to define the boundaries of an independent country as absence of tariffs establishes a free market system with no borders. However, it has been argued that tariffs assist developing countries as they are easy to collect, and these countries lack institutional capability to efficiently raise revenue and sales taxes. Non tariff barriers to trade are ways to avoid free trade regulations such as those of European Union (EU), World trade organization (WTO) etc. hat restrict imposition of tariffs such as anti dumping regulations and counterfeit goods measures, which have similar results as tariffs though imposed in special conditions. Other non tariff barriers are in form of processing or production requirements of a commodity with an import ban imposed on those goods which do not meet the requirement or condition. Some trade barriers are openly allowed in very limited conditions, when reckoned important to safeguard health, safety, sanitation or depletable resources. Non tariff barriers to trade take many forms such as state subsidies that favor an individual or industry hence disadvantaging others subsidizing, therefore becoming more competitive in the market as well as national regulations on safety, health, employment and product classification which tend to discriminate some business while favoring others. Quotas are also form of barriers as an industry can’t produce more than the recommended quantity, hence regulating its production capacity and trade in general. imilarly, foreign exchange control and multiplicity forms a non trade barrier as countries or industries that do not access it cant participate in foreign trade easily, hence it acts as a form of trade barrier as well patents and copyright laws that give an individual or industry the ultimate powers to produce a commodity alone, therefore regulating trade. Others include bribery, corruption, unfair customs procedures, restrictive licenses, import bans and restrictive import regimes which act as an obstacle to trade.