Global Trade Essay Example | Topics and Well Written Essays - 2250 words

Global Trade - Essay Example Consequently, fair trade has not developed in Third World countries, such as those of Africa and Latin America. Globalization is a post-World War II phenomenon that evolved based on the need to identify ways to promote economic progress among newly independent countries that used to be colonies. According to Piasecki and Wolnicki (2004), "After the second World War, there was widespread interest among economists in finding solutions to the poverty and underdevelopment left behind by the disintegrating colonial system" (par. 3). Experiments with planned economies in the 1950s and 1960s were met with only limited success, and frequent failure, in the developing world. "Until the 1980s, a score of developing nations experimented with non-market theories and concepts, but with rather limited success. Brazil, India experienced a few years of non-sustainable growth in the 1960s. Unfortunately, none of these countries could match the successes of those that chose the mixed economy and the market system in 1990s" (par. 8). By the 1980s, it became apparent that Third World development lagged and there was a need for a new approach. "By the 1980s, against many prominent economists' expectations, development had not materialized in the Third World - with the exception of the Gulf nations. Even in countries such as Qatar, Kuwait, and Saudi Arabia, where significant growth was observed, employment gains were generally unsatisfactory. Everywhere else in the developing world inequality and poverty grew. In addition, inflow of capital and Western consumption standards challenged traditional sectors and the existing power structures. As a result, tensions between modernizers and Islamic traditionalists heightened" (par. 9). In other parts of the world, the 1980s also brought a realization that economic development approaches had not been adequate. The 1980s came to be known as Latin America's "lost decade," in which there was "mounting debt, inflation, and negative growth" throughout much of the region (par. 15). A consensus began to grow around the idea that "a free market and open economy supported development far better than any form of protectionism and state interventionism." A new model of global capitalism, spearheaded by America, began to take hold in the 1990s in the hopes of reversing the economic stagnation in the Third World that had marked the decades since World War II. A theory began to take hold that opening up economies, spurring international investment, and knocking down trade barriers would produce a rising economic tide that would benefit both the developed and the developing world. It was hoped that multinational corporations let loose to pursue their profits across political boundaries would be the engine that spurred a new era of global economic growth. The new economic model was based on "tough fiscal and monetary policy, deregulation, foreign trade and capital flow liberalization, elimination of government subsidies, moderate taxation, liberalization of interest rates, maintenance of low inflation, and so forth. The proponents of these comprehensive liberal reforms strongly believed that the 'miracle of the market' would eventually so lve the problems endemic to underdevelopment. A special role in this process