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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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.
CEO and co-CIO of PIMCO. Served as President and CEO of the Harvard Management Company for 2 years, while also working at the IMF for 15 years. In 2008, his book "When Markets Collide", won the Financial Times award for Business Book of The Year in addition to being named as the one of the best business books of all time by The Independent.
Vice President and Director of the Global Economy and Development Program at the Brookings Institution. Former Turkish Minister of State for Economic Affairs. Head of the United Nations Development Program (UNDP) from 2005-2009.