Hence a wider market is necessary for economic development. Smith also believed that foreign trade should be treated the same way as domestic trade, self-regulating without any interference from the government. A policy of ‘laissez faire’ would lead to better outcomes for all countries involved. International trade influences economic growth in so many positive ways that Smith spoke about. Exports adds to the earnings of an economy, and has helped so many developing economies like India and Central Africa.
In other ways, globalization also means the free import of all nations and welcomes foreign investment in the main sectors of the economy. This means that countries become attractive by attracting global capital to the open economy of multinational
Developing countries have seen the most change thanks to it, but in order to increment their gains, they must also attract foreign investment (Dollar and Kraay 4). It is imperative for a country who is still developing to globalize in order to bring growth and decrease poverty. There have been multiple examples of success from developing countries as a result from trade, and among them are also Mexico, Vietnam, and Uganda; which have achieved success from their comparative advantages (Dollar and Kraay
Modern world is ever evolving, and so is its economy. Economic globalization is the system in which productions and markets in diverse countries are increasingly becoming interdependent because of the dynamic trade of goods and services and the flow of capital and technology (European Commission, 1997). Economic globalization causes many consequences throughout the world. Some may earn substantial benefits, while some may suffer from negative effects. Nonetheless, many evidences suggest that economic globalization benefits the majority of global citizen.
Resting at the core of neoclassical theory, it is one of the most influential concepts in International Trade Theory. It is based on the hypothesis that trade openness promotes greater economic growth elaborating on Adam Smith’s proposal that free trade could be advantageous to all countries by introducing the idea of specialisation. Previously, countries aimed to produce everything which they needed domestically while imposing heavy taxes to keep out foreign goods. Ricardo proposed the idea of specialisation as a way to persuade countries that inter-country trade was mutually beneficial and was the most efficient way of promoting economic growth. In other words, a country gains by specialising in the production of the goods which cost them the least and exporting the surplus produce to other countries in exchange for goods with higher production costs for them.
Cross-border linkages are no longer restricted to a small group of countries and multinational companies. The flow of goods and services through the open borders in the Eurozone has a massive impact on the nature of the business world today. Free trade allows businesses to import and export goods and services significantly cheaper than they would otherwise. The impact of Brexit is set to have a huge impact on the exportation of goods and services from Ireland to the UK. Ireland must explore other foreign markets to do business with as the consequences of Brexit occur.
As such, it is characterized by increasing social and economic openness and growing interdependence between the countries of the world. In economic contexts, it refers to trade liberalization or free trade. There are several global issues and concerns like poverty, bio-diversity, environmental protection, sustainable development and international security and cooperation which require global action and solution. All such issues instigate different countries to come closer to one another. Drivers of Globalization In general, globalization represents the increasing integration of the world economy, based on five interrelated drivers of change: • International trade (lower trade barriers and more competition) • Financial flows (foreign direct investment, technology transfers/licensing, portfolio
(i)Economy The ever growing dependence between global economies resulting from international trade of goods, services, finances and technological development paved the way for a global economy. Economic globalisation refers to the continual growth and reciprocated integration of world markets and is an unalterable trend which has been developing at an unprecedented rate since the turn of the twentieth century. Rapid technological development, particularly in areas of information and communication, are the two main forces that have fuelled economic globalisation (Gao). Further the expansion of science and technology has substantially reduced the cost of transportation and communication, making economic globalisation a smoother process (Gao). Centralised economies shifted focus to market economies and market oriented reform through world bodies like GATT, WTO, IMF and World Bank galvanised this process.
In my opinion, globalization has both positive and negative aspects. First of all, the most obvious advantage that the globalization brings about is that goods (such as car, laptop, smartphone, etc.) produced in one country can be sold in other countries .For the developed countries, now the can easily export their products and services to other countries to earn money. And for the developing countries, it can create opportunities of employment and reduce poverty, which is very good for the economy. The next positive aspect which is taken into consideration is that the developing countries now can receive sources of capital, new technologies from developed countries, which is very essential for the growth of a country.
Export is a function of international trade in which the goods produced in a country will be sent to another country for future sale or trade. Therefore, by selling of such goods and services it will increase the producing nation gross output. Export also one of the oldest form of economic grow, and occur on a large scale between nations that have fewer restrictions on trade, such as tariffs or subsidies. Another process involve in international trade is import, import is a process good or services brought from another country to another. Together with exports, imports also are the backbone of international trade.