Answer to Question #45314 in Economics of Enterprise for KHANYISA JOE TOBA

Question

DEFINE FIVE WAYS OF OPPORTUNITIES OF INTERNATIONAL TRADE

Answer 1

There are five developing opportunities for the current world economy.
First of all, the current world economy has got rid of negative impact of the global financial crisis. Comparing with most developed economies that have experienced a slight recovery, developing countries have achieved relatively faster economic growth. The emerging economies become the engine of the global economic development.
Secondly, international trade and foreign direct investment have been rapidly recovered. In particular, international trade has presented faster growth, with rising trade prices and larger amount of foreign direct investment in 2010.
Thirdly, financial control and risk management have been strengthened. On 21st July 2010, US President Barack Obama launched the 2010 Wall Street reform and Consumer Protection Act, with two central ideas of systemic financial risk control and financial consumer protection. EU plans to establish three authorities in 2011, responsible for supervising banks, financial transactions and insurance risks. Systemic Risk Management Board is about to be established as well to supervise systemic financial risks.
Fourthly, the current world trade protectionism impedes the free movement of goods and the development of economic globalization. Free trade will usually be a strong driving force of global economic recovery during the economic crisis. However, based on the World Trade Organization 2009 Bulletin, the number of non-tariff barriers has risen by 17%, from 1272 in 2008 to 1489 in 2009. As the international financial crisis spreads and deepens, trade protectionism is becoming increasingly serious. In addition, some countries have depreciated their currencies to boost exports, and other countries have asked them for currency revaluation through political pressure. I think this is also a kind of protectionist practices.
Finally, the reform of global economic governance has been launched and the G20 has become an important platform for international economic coordination. The G20 has a broader scale of members, with the participant of China, India, Brazil and some other countries, comparing with the G-7. There are three major problems within the current global governance structure. Firstly, there is no enough voice from the emerging economies which is incompatible with their increasing international economic positions and influences. The second is the unbalanced global distribution of benefits. Thirdly, regarding the global climate change issues, disagreements exist between the developing and developed countries.