How World Trade Organization Aids Poor Countries

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The World Trade Organization (WTO) was established in 1995. Its conceptualization, however, can be traced back to a series of trade treaties negotiated by several allied countries after World War II. Many countries were in an economic downturn immediately after World War II, and the United States reasoned that it would be necessary if countries banded together to support trade liberalism and capitalism (UNCTAD). The United States recognized that economic collaboration among nations was the only option that could help nations prosper while avoiding war. Thus, the countries that were former allies came together with the objective of signing an agreement that could regulate their monetary systems. At the same time financial institutions like the World Bank and the International Monetary Fund (IMF) were formed. The other part of the agreement was to create a branch that could regulate the side of the trade and economic cooperation, and it was known as the World Trade Organisation, which was a part of the United Nations (UN). The current WTO was as a result of the negotiations and agreements made in Geneva and Uruguay that led to the formation of the organisation (Akram, Dagfinn and Lucio 4). WTO currently has 162 active member states, and the objective of the WTO was to remove all barriers to trade and enable all nations’ trade freely because free trade is important for economic development.

The internationalisation of trade and globalisation of economies means that nations can trade with one another and this can promote growth and development. Since the end of the 20th century, it has been evident that the world embarked on the ambitious strategy to fight poverty in developing nations (Aswathappa 42). Global trade has been the main factor promoting economic development in the world, and since the signing of the General Agreement on Tariff and Trade (GATT) the global trading platform has been simplified. The liberalisation of trade together with the ratification free trade agreements mean that developing nations have access to markets that were restricted to them previously (Bank, Globalisation and new trend in international trade , online). The integration of the world economies implies that developing nations can now share in the success of the booming global trade. As noted, WTO has been central in assisting the developing countries to grow economically over time it is clear that the trade agreements have been central in promoting economic growth in the emerging economies.

Globalisation has seen poor economies feel the impact of competition, and the WTO has been central in assisting the developing nations to achieve their goals. The organisation has been instrumental in altering the trading environment so that it can benefit the local economies (Cao, Melody and Richard 2). Clearly, the influence of developing nations on WTO is evident, and may transitional economies have a say in the global stage and can bargain for better terms (U.S. Berau of Census 15). The WTO has four major objectives that it aims to achieve, first is to set rules for global trade, second is to oversee the process of trade liberalisation, third is to promote transparency, and finally, to resolve any trade problems and disputes. Apart from the listed objectives, there are more roles that the WTO is playing in promoting a fair trading environment.

The rules and agreements that were set by the WTO have been instrumental in ensuring that small and weak economies are protected against discriminatory trade practises (Cardamone, Shaver and Worthman 12). The WTO was set up to protect the interests of the developing nations and to regulate the large and powerful nations. This means that through the WTO policies both developed and developing nations are equal partners. All the members of WTO have equal status, and they do not have preferential treatment to one another, and this means that the benefit offered to one member state is accessible to all the other 161 member states and vice versa (Akram, Dagfinn and Lucio 4). The WTO members subject each other to limited barriers to free trade, and this means that all the tariffs, imports quotas, and other regulations are greatly reduced or eliminated in totality, and removal of such barriers ensures that member’s countries have access to larger market for their goods and services, access to larger markets means that developing countries will have more sales for their goods and hence enhancing rapid economic growth (Cao, Melody and Richard 18). For example, about 75 % of the members in the developing countries have a direct market in developed markets with lower or o tariff being charged on their exports. Due to WTO world countries have formed interdependence on each other with mutual interests, the aspects of inter-dependence range from trade, finance, and economic cooperation. The signing of WTO agreement has a direct impact on developing countries global consumption trends and determines job opportunities in developing countries.

The formation of WTO reflected the downfall of economic monopoly where developed nations dominated developing nations, and the agreement is considered an accelerating factor favouring international development (Nakra 2). According to the World Bank report, with the adoption of WTO agreement about 450,000 global subsidiary companies are now operating worldwide, and this means that more people have access to jobs (George 103). It 2015 alone an estimated $ 9.5 trillion worth goods and services sold in different parts of the world (Diaz and Jerez 43). Most of the markets were in the developing countries. Since the signing of the agreement, the level of transnational exports from developing countries exceeds the domestic sales in those countries, and this is important in promoting GDP growth in those countries. The international exports from developing economies now account for about 70% of the world trade and approximately 20% of the world production which shows the rate of economic development (Cardamone, Shaver and Worthman 6). Through the WTO more industries have been developed, and this has a lot of benefits to buyers in both developed and developing countries, since it has given customers’ access to a variety of imported goods that were previously not available in their countries (Adler, Proctor and Winder 59). Through WTO for instance, consumers in developing countries are able to choose from a variety of consumer goods in the market, the goods and services are from different developing countries and manufacturers, and this is helping the development of industrialisation in those countries. The global competition that has been brought about by the liberation of trade has enabled companies to produce quality products and maintain innovativeness in developing countries in order to maintain their market share and remain competitive.

Globalisation is a major product of WTO that controls capital efficiently and distribution in developing nations. It is clear that through the interventions many people from developing nations have access to financial resources in terms of loans and grants, and this has enlarged the credit market and the international market, hence positively influencing Foreign Direct Investment (FDI) in the developing countries (Albert 46). The signing of WTO has made the capital flow more efficient, and with the integration of international business transaction models developing nations can purchase and sale goods and services anywhere in the world (Roy and Sideras 91). Commercialisation of capital has facilitated buying of goods, since it is now easier to purchase goods through the Internet and through phones. Due to limited trade barriers and development of the e-ccommerce, people can import and export goods freely (George 10). In developed countries, WTO has accelerated international importation of goods, thus favouring the third world countries economy since they can sell their goods and services to the developed countries. The WTO agreement has motivated people in developed nations to work hard and produce surplus for sale and export. The current global trends of production and distribution of products have become very easy and efficient due to WTO.

Economically, WTO has enabled mass production of products, and this has ensured availability of foreign goods, which are advertised freely among member countries. Through the WTO any international company is free to market their products in any country (Frolick and Ariyachandra 10). International advertisement ensures that information is accessible to consumers all over the world. The advertisements influence people to shop for the new brand of goods and test their efficiency, and thus consumers in developing nations have access to cheap commodities. The income differences that come with international trade bring the change in consumption tastes in the developing countries. In developed nations consuming international goods symbolise the social status, high-earning consumers will purchase expensive products; the purchase of goods and services has been improved in many countries in the world through WTO (Lechner 76). However, this is not a guarantee to the developing nations that it will improve their standards of living due to the insufficient capital for the purchase of products, goods, and services based on the difference in expenditure in developed nations. The available resources may not be enough for all the developing nations, no matter how the country distributes its money and resources to its citizens, and hence all countries need to trade with one another. It is the responsibility of all the partners to create an enabling environment that can promote development.

As noted, the economic and social life of consumers is determined by the global market forces which define the restrictions and barriers to trade. It is clear that WTO has helped determine the direction of action of the international and domestic trade (UNCTAD). The global market is replaced with supply-driven pattern, and the government control on trends of goods is limited because of the consent to free trade. This brings about changes in the economy through the growth of consumerism patterns, whereby poor consumers can only access subsidies to cushion them against competition, liberal trade means that developed countries are not protected by any form or quota or tariff systems (Sklair 54). The liberalisation of trade encourages alienation of consumer behaviour; consumers will tend to adopt foreign products to show the class, which has been the case in many developing nations. It is clear that since the signing of the WTO, consumers are now willing to spend more money on quality and noticeable products (George 110). Also, more developing countries are willing to engage in trade and commerce activities with other member countries which are beneficial.

Globalisation has impacted on the way people work in terms of flexibility and differentiation of work in the world, particularly in developing nations. WTO has enabled flexibility in terms of production and management in industrialising countries (Lechner 5). The ratification of WTO has enabled workers in the developing countries to develop more autonomy and responsibility. Through WTO product managers have shifted the management approach to integrate factors that encourage global trade (Bank, The evidence and impact of financial globalization). Thus, many product managers are investing more innovation and promotion activities aimed at creating brand awareness to promote their products globally. Through WTO, many developing countries have adopted the new production technologies that have increased efficiency in production to meet the expanding and growing demand of the global market. For instance, the use of machines in production has increased work output and increased accessibility and rapid retrieval on information to make the global operation of business possible. Various telecommunication applications have changed the way firms and employees operate, and this attributed to the developed global trade (Akram, Dagfinn and Lucio 241). There is increased standardisation, virtual team creation, increased employee, and corporate responsibility.

Globalisation that has come with WTO policies has enabled employees to create virtual workstations and teams through tools of information technology tools. Geographical boundaries are no longer a limitation as different organisational employees can communicate and hold meetings virtually through video conferencing and Internet. This has been made possible through information technologies like computers and smartphones. Hence, employees in different places can hold a meeting on the organisational changes (United Nations 19). Also, they can report to managers without physical contact and hence stay in touch with the management. Virtual offices that are a result of WTO have enabled working from anywhere so long as there is network connectivity. This has eliminated the need for office presence for work to be done as one can work from anywhere. There is the security of information as the networks are secured, and only authorised employees can access the information. Online platforms that are products of WTO have positively impacted on working systems in academic, health, and business institutions (Lechner 78). WTO has to ensure standardisation of working methodologies among its companies and organisations. This requires the address of cultural, technological and political gaps for efficient working of the organisation. WTO has necessitated the standardisation of procedures and policies. With WTO, employees need to take up new roles and acquire new skills. For instance, machine operators might require training on basic computer skills. All these changes are important to keep the employees on track. Working from different locations has made it easier to manage labour and other resources.

According to the report developed in 2015 WTO has helped developing countries to take up the available opportunities and adapt to the changing world market. The WTO has ensured that developed nations from binding and committed agreements with the developing nations and this have ensured certainty in trade and business dealings. The WTO has promoted in bridging the developmental gap between the developed economies and the rapidly developing economies. The rates of GDP growth for most developing countries stand at 4.7 % (World Bank 27). The rate of economic development shows that developing countries are progressing and the purchasing power in the poor countries is improving. The increase in GDP translates to better standards of living and reduction in poverty and as such. WTO policies have helped mitigate the impacts of poverty. Efficiency in trade and removal of barriers means that it is easier to start and run a business, and this contribute to global expansion. The removal of tariffs and quotas means that greater participation in trade will be guaranteed.

Developing countries are now part of the global value chain since they can now export their goods and services to anywhere in the world (Carr 81). Developed nations now account for more than half of the total exports in the international market. The expansion of the global value chain means that more developing countries can participate in trade with other countries regardless of the geographical condition (U.S. Census Bureau 17). The lowering of tariffs and quotas means that more developing countries are willing to participate in the global value chain. The agreement protects member countries against competition and investment issues.

The WTO policy requires that the individual members adopt and adjust their tariffs and commitments, for example, it is necessary for the member countries to adhere to the import concessions. The tariff binding is clearly stipulated in the WTO schedule of concessions which all members have to obey. The global WTO tariff system works to stabilise the global trading system (Porter and Rivkin 209). Removing tariffs means that developing countries can no longer protect and cushion their companies against unfair competition from the development nations. Some countries have used the infant factory systems to realise an economic growth and development. Some new policies have enabled detailed and complicated negotiations so that to reach an agreeable rate of tariffs. The international community through the WTO has made it more flexible because developing countries now have the power and concession to institute tariff and quotas. The additional tariffs are important in facilitating the developing countries develop their industries and also their economic development.

Another special treatment that developing nations are experiencing in the WTO agreements is the issue of government subsidies. Government subsidies are important elements for the industrial development of poor courtiers (Cao, Melody and Richard 338). Under the global agreement on subsidies governments strategically plan and prioritise on the products and services that are likely to contribute to high profits. Some of the common subsidies provided by the WTO organisation include subsidies on exports and import (Akram, Dagfinn and Lucio 241). Subsidies are usually offered to make domestically produced products cheaper than imports, adding value to their competitiveness.

Finally, the WTO agreement has assisted many developing countries to benchmark their progress by allowing the countries to take advantage of the removal of barriers in international trade to increase their market share. Developing economies are encouraged to mitigate the current risks and make binding commitments that can promote trade and commerce. The commitments are important for the active development of the countries under question. It is clear that countries that have adhered to the ruled and regulations of the WTO agreements have experienced the annual growth rate of about 1% annually. Although business development is the major objective of the agreement, other issues like unfair competition remain a major challenge. It is necessary that the relevant measures are put in place to address the problems.

Works Cited

(UNCTAD), United Nations Conference on Trade and Development. World Inestment report 2013: Global value chains: Inestment and trade for development. Geneva: United Nations, 2013.

Adler, Rosenfeld, Proctor and Winder. Interplay: the process of interpresonal communication. Ontario: Oxford press, 2012.

Akram, Q, Rimme Dagfinn and Sarno Lucio. "Arbitrage in the foreign exchange markets: turning on the microscope." Journal of international economics (2008): 76: 237-253.

Albert, Carneiro. "When leadership means more innovation and development." Business strategy series (2008): Vol 9 (4) 176-184.

Aswathappa, Kallupally. "International Business ." 2001.

World Bank. "GLobalization and new trend in international trade." 2008.

Caprio, Gerard. The evidence and impact of financial globalization. New York: Academic press, 2012.

U.S. Census Bureau. County business pattern. Nevada: U.S bureau of census, 2014.

Cao, Henry, Lo Melody and Lyons Richard. "Inventory information." Journal of business (2006): 79 (1) 325-363.

Cardamone, M.A, M.A.M Shaver and Worthman. "Business plannning." Healthcare financial management (2004): 40-46.

Diaz, A and Jerez, Belen. "House price sales and time on the market: search of theortica framework." International economic review (2013).

Lechner, Frank J. Globalization: The making of the world society. London: John Wiley & Sons, 2005.

Frolick, Mark and Ariyachandra, Thilini. R.. "Business performance management: One truth." Business intelleingence." Information Systems Management (2006): 23(1):41-48.

George, Ritzer. Globalization: a basic text. London: John Wiley & Sons, 2009.

Porter, Michael, E and Rivkin Jan W.. "Looming challenge to U.S competitiveness." Web. Harvard Business Review (2012).

Nakra, P. (2007). "Making the most of international trade shows." International Business Trading.

United Nations. World youth report 2003: The global situation of young people. New York, NY: United Nations, 2004.

November 23, 2022

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