The current global economy is characterized by extensive globalization of the markets. The accompanying international trade affects industrial nations and developing countries in differing degrees. The analysis of trade policy in developing countries can, in the process, be analyzed using the same tools as those for developed countries, namely industrial na-tions.
Earlier development stages of trade policy amongst developing countries were character-ized by protectionism and an orientation towards a domestic market which consequently led to a weak internationalization of these countries. It was not possible to decrease the distance between the classical industrial states since the industrial states themselves, in the context of the first phase of globalization, were able to significantly advance on a global scale.
As a result of the rejection of protectionism by means of changing political structures and the accompanying liberalization, it was therefore possible, in the early phases of globaliza-tion, whose origins lie in the end of the 19th and the start of the 20th century, for several developing countries to successfully advance in the wake of the general dynamic of inter-nationalization.
The share in the world good’s market; the volumes in direct investments and the inflows of portfolio capital were able to increase amongst these groups of countries, albeit not for all countries to the same extent.
As a result, the majority of developing countries today are tightly embedded in world trade. Moreover, these countries were capable of registering export quotas of 20% and 30%. The gap between the so-called OECD countries could be largely made up for.
In the course of early globalization, the OECD countries also dynamically developed with the consequence that many developing countries were, in turn, able to benefit from these global economic interactions. Today, the export revenue of OECD countries with develop-ing countries represents 25%. This is a 40% increase within the last 20 years.
The foreign trade of developing countries with OECD countries, on the other hand, ac-counts for merely 60% of the total foreign trade of developing countries in our present day. At the same time, there has been an emergence of foreign trade diversification in favor of exporting industrial goods by courtesy of developing countries which amounted to as much as 84% in 1996 which in 1996 accounted for as much as 84%.
Table of Contents
1. Introduction
2. Objective:
3. Definition of developing countries in the economic sense of the word:
4. Political Trade Unions of Developing Countries:
5. Globalization and World Economy- Purpose of the Research:
6. Distinction between emerging economies and developing countries:
7. What distinguishes the earlier trade policy of developing countries?
8. How were developing countries and their trade policy seized by globalization?
9. Outlook and Summary
Research Objectives and Key Topics
This essay explores the evolution of trade policies in developing countries, specifically analyzing their transition from protectionist frameworks to active integration into the global economy, while providing a comparative perspective against OECD nations.
- Theoretical definitions and classifications of developing countries and emerging economies.
- The impact of globalization on international trade dynamics and market integration.
- Comparative analysis of historical protectionist measures versus modern open-market strategies.
- The economic rise of emerging nations and their future competitive roles against industrial powers.
Excerpt from the Book
7. What distinguishes the earlier trade policy of developing countries?
From the Second World War up until the 1970’s, many developing countries attempted to build their national economies through means of promoting so-called „import substituted industrialization”, in which they curbed the import of industrial products. The goal was to thereby create an industrial sector/special branches for the domestic market and to respectively promote this. The interconnected argumentation of economic theory referred to the so-called „educating customs argument“. Thus, one took the theoretical approach that developing countries are equipped with a “comparative advantage” 20 as opposed to industrial nations regarding industrial goods, which initially have to be protected. The theory of the comparative price advantage claims that an advantage of trade between two countries is not dependent on the respective absolute cost of production but rather in relation to the costs of the produced goods together21. Trade between two countries should always then, in that respect, be advantageous if there are different structures of production costs available to them. In other words, for a product to be produced, a country has to renounce fewer units of another good than the other country (lower opportunity cost).
Summary of Chapters
1. Introduction: Discusses the global economy's current state of extensive market globalization and its varied impact on industrial and developing nations.
2. Objective:: Defines the scope of the research, focusing on the development of trade policy in developing countries and its implications for future market internationalization.
3. Definition of developing countries in the economic sense of the word:: Examines the challenges in defining developing countries and outlines key economic indicators and metrics used for their classification.
4. Political Trade Unions of Developing Countries:: Profiles organizational coalitions like G24 and G77 that strive to represent developing nations' economic interests in global trade.
5. Globalization and World Economy- Purpose of the Research:: Analyzes globalization as a process of market solidification and explains the research focus on outsourcing, offshoring, and international labor division.
6. Distinction between emerging economies and developing countries:: Explores the conceptual differences between traditional developing countries and emerging economies undergoing progressive industrialization.
7. What distinguishes the earlier trade policy of developing countries?: Analyzes the post-WWII era of import substitution industrialization and the theoretical reliance on comparative cost advantages.
8. How were developing countries and their trade policy seized by globalization?: Reviews how global integration and WTO standards have influenced trade policies, utilizing China as a case study for successful transformation.
9. Outlook and Summary: Reflects on future trends, the potential for emerging economies to surpass traditional industrial nations, and the necessity of harmonizing national and international interests.
Keywords
Globalization, Trade Policy, Developing Countries, Emerging Economies, Import Substitution, Comparative Advantage, OECD, WTO, World Economy, Industrialization, International Trade, Economic Development, Market Integration, Protectionism, BRICS
Frequently Asked Questions
What is the core focus of this publication?
The document investigates the transformation of trade policies in developing countries in the context of globalization, examining their shift from protectionist measures to globally integrated economic models.
What are the primary themes discussed?
The themes include the definition and classification of developing nations, the role of political trade unions, the shift in trade strategies, and the competitive rise of emerging economies like China.
What is the main objective of the research?
The goal is to illustrate and explain the evolution of trade policies in developing countries, particularly in comparison to OECD nations, and to assess the future consequences of these reoriented policies.
Which scientific methodology is applied?
The work employs an analytical and empirical review of historical economic developments, international trade theory, and comparative data from global institutions like the UN, World Bank, and IMF.
What topics are covered in the main body?
The main body covers the definition of development status, the influence of globalization on trade, the distinction between emerging and developing economies, and case studies on economic reform.
Which keywords characterize the work?
The work is defined by concepts such as globalization, comparative advantage, trade policy, and economic integration in the global marketplace.
How has the definition of "developing country" evolved in this text?
The text notes that no single recognized definition exists, but uses metrics such as per capita income, human development index (HDI), and structural economic factors like industrialization levels.
What is the significance of the "comparative advantage" theory in this context?
The author discusses how this theory has served as both a justification for past protectionist "import substitution" and a catalyst for modern, globally open trade strategies.
- Quote paper
- Rainer Schenk (Author), 2012, Trade policy of developing countries and emerging economies in the course of globalization, Munich, GRIN Verlag, https://www.grin.com/document/198594
