Today, there are exists a debate on whether global trade helps to hurt the poor people in the society. From the careful study of global trade, a number of benefits emanates from the Organization’s activities across the world. On the other hand, globalization does not only hurt the poor because there are numerous benefits that accompany any society that embraces globalization. No country in the world can operate in isolation, and without globalization, a society can lack some basic commodities. Similarly, World Trade Organization plays crucial roles in ensuring that the markets around the world have all types of goods and services from across the world (Bardhan 91). Therefore, the paper will offer various concepts that help to spark the debate on the usefulness of global trade across the world.
The concepts of GATT and WTO help to determine the benefits of engaging in global trade. The provisions of GATT and WTO helps in minimizing trade barriers among the different countries. This occurred in the postwar period, in which the different organizations were able to negotiate their multilateral agreements. The agreements made between the different countries have led to the creation of the largest trading blocs that promotes economic growth. However, there exist conflicts between the developed and developing countries (Frieden 67). This was noted in the recent WTO negotiations in Doha, Qatar. Based on the GATT and WTO implications, global trade has been able to promote agricultural trade among the developing countries from the trade agreements.
Moreover, the WTO system has remained questionable due to the reported cases of inequality among the member states. The industrialized countries were able to gain more advantages over the developing countries. This made it difficult for the third world countries to develop economically. This shows the how global trade have hurts people in the developing. This emerges from changes in technology, collapse of communism, and increased civil wars among the different African countries. However, it is noted that the benefits of global trade outweighs the challenges faced in the developing countries. WTO cannot fully escape the blame of hurting the poor because already developed countries such as the United States of America and other first world countries have been accused of making superior decisions. The developing countries have argued that the process of establishing the rules and WTO in general is not democratic (Frieden 219). The poor countries continue being poor while the privileged ones continue as such. Employment and Human Rights among the poor people are not properly considered. The developed nations make it difficult for those from poor countries to access work permits in their countries.
The concept of comparative advantage is able to offer reliable understanding of a country’s production and export. It requires that a country should specialize in the production of goods and services that it produces its best. This helps to promotes value of the exports given the existing trade barriers. Based on the principles of comparative advantage, a country becomes successful in global trade through specialization. The Heckscher-Ohlin approach is another concept that illustrates the aspects of national trading systems. The concept provided that economic aspects in form of factor endowments characterize a country. The theory of Heckscher-Ohlin requires that a country will always export products that use its abundant factor of production. The factor endowment includes unskilled labor, human capital, and investment among others. This determines the overall national competitive advantage. Heckscher-Ohlin concept links the different countries promoting global trade. This strengthens the country’s economy and thus, improving the living standards of its people (Diaz-Bonilla and Ashok 231).
Moreover, the theory of Stolper-Samuelson theorem illustrates the benefits obtained from the various factors of production. It aligns with the principles of Hickscher-Ohlin on the limiting factor a country’s exports. The protection of the developing countries helps the workers from being hurt by the investors. Global trade is beneficial to the people as illustrated by the Stopler-Samuelson approach. In addition, the concept of Ricardo-Viner predicts the trade-policies preferred by certain firms in a country. The model is able to take into consideration the interests of the individual flows in an economy. This illustrates the strong incentives of the different sectors in promoting economic growth in the countries (Bardhan 75). The concept of protectionism illustrates the available ideologies in protecting workers and consumers from being hurt. The concepts illustrate the ability of global trade delivering various advantages as well as the challenges faced in meeting the people’s needs.
The concept of globalization also emanates from global trade. Globalization also encourages innovation. Innovation makes people from poor countries access quality goods and services. This was not the case before globalization was embraced by many countries. Global Free trade is seen as an avenue of economic growth not only in developed countries, but also in the poor countries. Economic growth remains significant feature in most countries. Countries that do not record significant economic growth annually rarely attract investors (Reuvid and Sherlock 361). Investments in any market are crucial because the poor people benefit in getting jobs in the newly established businesses. In summary, global trade can help people, but it could hurt citizens in the country.
Bardhan, Pranab. “Does globalization help or hurt the world’s poor?.” Scientific American 294.4 (2006): 84-91.
Diaz-Bonilla, Eugenio, and Ashok Gulati. “Developing countries and the WTO negotiations.” Trade Policies and Food Security (2003): 2002-2003.
Frieden, A. Jeffry. Global capitalism: Its fall and rise in the twentieth century. New York: W. W. Norton, 2007. Print.