What Are the Key Concepts of the Unit: ECON802 Economics and Global Trade?

Commercial trade policy has a significant impact on the nation's economic growth. At times, several countries in the world adopt both trade liberalisation and protective commercial policies. The governments that participate in global trade are culturally and geographically autonomous. From their industrial prosperity, these countries pursue their trade strategies.

Originally, trade was governed by bilateral agreements between two countries. For generations, most countries had tariff barriers and various limitations on foreign trade because they believed in imperialism. Global commerce that is fair and free is desirable since it benefits all countries involved.

Overall, exports and imports in global trade fell 14.3 percent between the first quarter and the second quarter fiscal in 2020, the greatest one-quarter drop ever recorded - WTO (World Trade Organisation)

Different governments, however, put varying forms of roadblocks to overseas marketing efforts. Import tariffs are enforced or created on imports and exports that are unjust and damaging to the expansion of free trade between nations. In this blog, we'll go through some ECON802 Economics and Global Trade examples in-depth.

What Is Economic Globalization and Global Trade?

Economic globalization means the increased interconnectivity of international economies and trade in global capital flows, goods & services and the speedy advancement of technologies.

This symbolizes the world's stable growth and mutual absorption of trade borders, and it is an inevitable trend for the world economy. Two of the fundamental motivating factors for financial globalization are the rapid expansion of information exchange for all forms of productive means and commercialization.

As per a UNCTAD (United Nations Conference on Trade and Development) analysis released on November 30, 2021, the costs of global flows of goods reached $5.6 trillion for the 3rd quarter of 2021, a record quarterly peak.

Following the II World War, nations around the globe pursued a protection policy to rebuild their war-torn economies. However, other governments around the world responded by adopting a retaliatory stance. Which further resulted in a decrease in transaction volume and a decrease in productivity, efficiency, revenue, and occupation.

As a result, these factors sparked a wave of rapid liberalization by lowering tariff barriers. It cleared the path for market interdependence among countries, as well as with governments throughout the world. The unit ECON802 Economics and Global Trade hold an in-depth study.

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How Does Global Trade Help the Economy?

Global trade plays a significant role in eradicating economic inequality. Governments that allow global trade develop quicker, boost efficiency, innovate and provide better opportunities for the country’s citizens - economic growth and employment opportunities. Low-income populations benefit from open trade because products and services are more inexpensive.

Linking into the international economy via business and global supply chains helps domestic and international economic growth. The World Bank's work in nations including Herzegovina, Bosnia, Indonesia and Macedonia has facilitated international trade, provided better logistic solutions, and reduced customs clearance protocols.

The WTO (World Trade Organisation) predicts a 7.2 percent rise in global trade in 2021, following a 9.2 percent decline in 2020.

These and many other programmes contribute to a wider, dependable, and stable global trading system for everyone. The Global Trade Organization's Facilitation Agreement has offered a joint global mission to reduce trade duties and better connect the countries to the global economy. This is an epitome of ECON802 Economics and Global Trade examples about the benefits of global trade.

Such a landmark creates a leeway for the WBG (World Bank Group) to continue assisting nations in developing and implementing realistic reform initiatives to reduce poverty and economic equality. Countries will grow economically with global trade and develop a better market, employment, and innovation for the citizens.

What Are the Challenges in Global Trade?

Internal trade entails the exchange of goods and services, flow of capital, and economical development of the world's various countries. Regardless of the needs of such transactions and the benefits it offers, the challenges in global trade cannot be overlooked. The major challenges in global trade are:

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Distance

Global commerce usually entails considerable distances. For global trade, the distances between nations pose a significant challenge. Due to geographical divisions, it is tough to build a strong relationship among market participants.

Transport and Communications

Large distances in foreign trade make proper and timely communication and transportation challenges. Both of these methods entail a significant amount of time and money. The high expense of transportation is a significant impediment to global trade.

The global medical goods exports increased by 15.5 percent in the first quarter of 2020 due to the COVID-critical products supply chain - WTO

Risk and Uncertainty

When compared to domestic trade, global trade is more risky and uncertain. Because commodities must be carried across large distances, which entails numerous risks, Commodities in transit across international borders are vulnerable to the dangers of the sea. The marine insurer will pay for these hazards, but it comes at a cost in international commerce operations. You will get more insight on this in the unit ECON802 Economics and Global Trade.

Import and Export Restrictions

Different legislations have their own set of laws, taxes, and import/export rules. Buyers and sellers must complete all customs processes and obey all such regulations.

Study of Foreign Markets

Each international market has distinct qualities. It has its own set of criteria, conventions, practices, scales and standards, and strategies, among other things. An in-depth understanding of overseas markets is essential for successful foreign commerce, which a regular trader may lack.

These are the major challenges faced by the international traders, and you will learn more about such ECON802 Economics and Global Trade examples in this unit. International trade is quite difficult, and various governments around the globe focus on the minor changes in the economic and trade policies to align their commerce policies, so it is essential to keep up with such trends.

What are some Economic and Global Trade trends in 2022?

Many businesses, such as transportation, tourism, restaurants and leisure, have faced significant challenges as we enter the "new normal," but many others have seen opportunity. In ECON802 Economics and Global Trade, you will have to follow such trends and developments. The commerce industry, specifically the global trade industry, will continue to evolve and change in 2022, and the leading trends of 2022 are:

1. Economic growth will remain moderate, with local industry variations.
2. Issues will persist in the supply chain, although COVID-19 limits may provide improvement opportunities.
3. Climate change is another major factor that will significantly impact the global supply chain. Flooding, extreme weather, droughts and hurricanes are expected globally and thus; global trade will continue to slow down.
4. Data security enhancements are prime development in international commerce
5. 2022 as the governments continue to face cyber-attacks and data leaks in the previous decade.
6. During COVID-19, AI and automation helped businesses by diminishing workforces, creating remote work opportunities, and meeting customer needs despite the distance. These technologies are getting momentum like never before.

The year 2022 holds transitions and developments, some anticipated and others not. With the outbreak teaching us valuable lessons, it is evident that we cannot forecast our global position with any surety. But those who accept this reality are moving ahead with inventiveness and invention.

They'll gather knowledge and develop answers that will propel global trade into a new age of endurance and growth, and that's something that everybody can hope for. In the unit, you will learn more about ECON802 Economics and Global Trade examples and the global trade trends.

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