Evaluate the Role of International Trade and Economic Integration in Promoting Development.

Topics: International trade, Free trade, World Trade Organization Pages: 16 (6266 words) Published: March 15, 2013
Evaluate the role of International trade and economic integration in promoting development. Traditionally, development has been measured in terms of income levels (GDP per capita) as this can show the value of a country’s goods and services produced in a year shared between its population. The GDP per capita can then be compared between multiple countries to form comparisons. However, the fundamental flaw of GDP is that it does not show what resources were used, how they were used, pollution or the sustainability of resource exploitation. Bob Kennedy famously said before his assassination “Our gross national product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage...yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play”. While traditional economics explores how scarce resources can be allocated to maximise output, the true definition of “development” is unknown and is open to much interpretation. However the indicators and wealth, which reflects the quantity of resources available to society, provide little information about the allocation of those resources. For example, resources may not be equally distributed within society or the social groups. Even countries which share similar GDP Per capita differ substantially when it comes to people quality-of-life: access to education, health care, employment opportunities, the availability of clean and safe drinking water and the threat of crime etc. Recent United Nations documents emphasised “human development” measured by life expectancy, at adult literacy, access to all three levels of education, as well as peoples average income, which is a necessary condition of their freedom of choice. In a broader sense the notion of human development incorporates all the aspects of individuals wellbeing, from their health status to the economic and political freedom. According to the Human Development Report 1996, published by the United Nations Development Program, “human development is the end—economic growth a means.” The World Bank calculates the country’s GDP per capita in US dollars and divides all countries into the following groups: The groups are: low income ($995 or less), lower middle income ($996 - $3,945), upper middle income ($3,946 - $12,195) and high income($12,196 or more). US dollar is used to allow easy comparisons based on one single market value. The country’s GDP is adjusted to take into account the purchasing power parity, highly watched different currencies will buy in terms and what goods and services can be purchased in each country. The economist Simon Küznets, a central figure in the development of GDP, urged the US Congress in 1934 to remember that “The welfare of a nation can scarcely be inferred from a measurement of national income.” However, until quite recently, it has routinely been assumed to be a reliable representation for standard of living. The United Nations development program (UNDP) has developed an alternative measure of development that recognises the limitations of GDP per capita. This is known as the human development index and attempts to reduce and measure that combines some of the outcomes that might be valued in the development process. The human development index takes into account: life expectancy at birth, the adult literacy rate and GDP per capita in US dollars at purchasing power parity (As an indicator of the standard of living). Countries unknown ranked according to the value of the human development index and grouped into three categories: high, medium and low human development.

The HDI is a much broader measure of human development and brings to focus a greater range of factors that ultimately lead to a happier, healthier and wealthier country. The human development index also allows judgements to be made on the country’s development over time. The HDI also focuses attention is on the countries with...
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