The opportunities and challenges of international trade have been an issue of major concern for the economists and policy makers of the contemporary world. As far as the challenges facing the international trade are concerned, they vary with the economic and social scenarios of the countries involved in cross border trade. Be it a developed or developing economy, the primary challenge of global trade is to maximize the gains from trade. The countries involved in international trade always try to focus on the efficient utilization of the opportunities derived from exchange of goods and services with their trading partners. To utilize the benefits of the open market economy is another major challenge before world trade.
In this era of globalization, international trade has a crucial role to play so as to bring about economic and social harmony among the developed and developing nations of the world. With openness to trade becoming more popular, the issues of trade solidarity both at the domestic and multilateral level have gained huge importance across the world.
Globalization and the resulting economic liberalization have opened up an array of challenges before the developed and less developed economies that are involved in international trade. One of the major challenges that are crucial in the context of relatively backward economies is that the macroeconomic policies of these countries are not always proportionate to utilize the gains from world trade. International trade can be beneficial if the gains derived from it can be distributed evenly across the different layers of the society. Here lies the importance of “trickle-down” effect.
Domestic trade involves exchange of factors of production at the regional level; whereas international trade ensures greater mobility of latest technology and goods and services across the nations. World trade helps the developing countries to have ready access to the modern techniques of production. However, the challenge here is to use these techniques in an efficient manner. The industrial setup and social infrastructure need to be developed as per the global standard to optimize the benefits from international trade.
There are instances of African nations, which have failed to utilize the gains from trade due to inappropriate macroeconomic setups. Before opening up the economy, the backward nations need to safeguard the interests of the domestic entrepreneurs. The liberalization policies need to be taken up gradually so as to help the infant industries face the challenges of the changing economic scenario.
So the challenges before international trade may arise from different fronts. The countries involved in world trade need to adopt proportionate policy measures to make use of the gains from trade for the overall development of their economies.
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Professor at Columbia University. Recipient of the Nobel Memorial Prize in Economic Sciences in 2001 & the John Bates Clark Medal in 1979. Author of "Freefall: America, Free Markets", "The Sinking of the World Economy", "Globalisation and its Discontents" & "Making Globalisation Work".
Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago. IMF’s Chief Economist from September 2003 to January 2007. Inaugural recipient of the Fischer Black Prize.
Professor of Economics & Director of the Earth Institute at Columbia University. Special Adviser to the UN Secretary-General on the Millennium Development Goals. Founder & co-President of the Millennium Promise Alliance.
Mario I. Blejer is a former governor of the Central Bank of Argentina and former Director of the Center for Central Banking Studies at the Bank of England. Eduardo Levy Yeyati is Professor of Economics at Universidad Torcuato Di Tella and Senior Fellow at The Brookings Institution.
Andrea Edwards has worked in marketing and communications all over the globe for 20 years, and is now focused on her passion – writing. A gifted communicator, strategist, writer and avid blogger, Andrea is Managing Director of SAJE, a digital communications agency, and The Writers Shop – a regional collaboration between the best business writers in Asia Pacific