Bonus Assignment 3
International trade and economics
Shanghai University of Finance and Economics
May 30, 2014
Advantages of trade liberalization
During these last decades, the world economy has experienced rapid growth. This growth has been fueled in part by the more rapid growth of international trade. Trade growth, in turn, results from both technological developments and concerted efforts to reduce barriers to trade. Some developing countries have opened their economies to take full advantage of opportunities for economic development through trade, but many are those who abstained. Trade barriers that persist in industrialized countries are concentrated on agricultural products and manufacturing intensive labor, for which developing countries have a comparative advantage. The pursuit of trade liberalization, particularly in these areas, both industrialized and developing countries, help the poorest out of extreme poverty while also benefiting the industrialized countries themselves.
Policies that open economy to trade and investment around the world are essential to sustained economic growth. For several decades, no country experienced economic success, demonstrated by the substantial increase in living standards of its people, without being open to the rest of the world. Conversely, opening to trade - as well as foreign direct investment - was an important element in the economic success of East Asia, where over the last 20 years the average import duties fell to a level of 30 % to 10 %. China for example, remained closed in 2003 based on the undivided power of the Communist Party and its black market exchange rate premium, which averaged 36% between 1990-1999 (Easterly and Sewadeh, 2002). In addition, China had a relatively high average tariff rate, 31%, between 1990-1999. Today, we can admit that China is perhaps the best example of the positive...
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