SOURCES FOR ECONOMIC DEVELOPMENT IN THE DEVELOPED WORLD
I. Introduction
Much has been said on the context of development and economic growth in the past and existing literature. Countries have gone out of their way to follow the path on which actual development could be acquired. Economic theories and other principles that will essentially help nations make policies have not been rare in contemporary studies of development. Unfortunately, a considerable number of countries have tried and miserably failed in its attempt to acquire development and essentially sustain it. Nevertheless, there are still nations that have been in the forefront of advancement both in terms of its economy and even the standard of living of its people. These countries are those that have been coined as developed countries. This study will be trying to discuss the possible sources of economic development that these countries have acquired. Moreover, a closer look on the manner in which they have sustained these sources will be taken into consideration in this study. Specifically, the discussions will focus on factors like human resource, technology, and global trade. The discussions will be based on the reading requirements of the course and a considerable number coming from academic articles found in the World Wide Web.
II. Human Resource
Human capital is one of the vital elements of development. Theories on how to effectively mange this factor essentially focused on the improvement of organizations. Nevertheless, in a much wider scale, the effective management of a country’s human capital represents the consequent boost in the development efforts in terms of one’s economic status. Studies have been made regarding the improvement of a nation’s human capital particularly with regards to the improvement in education, health, and even growth opportunities for the individual. ( 2002, 200) This shows that the development of a country’s human capital rest on the capability of the state leadership to enact and implement laws that inherently would achieve a higher standard on elements like education, health and growth opportunities. The policies serve as the strategies in which nations could manage the development of their human capital. (, 2000, 5)
This part of the study will be tackling the human element in the development of economies. Particularly, the discussions will be focusing on the development of economies of developed countries. Topics like the evolution of human capital, the current states of human capital in developed countries, the potential of the human element, and a view of the industrial revolution. All the discussions will be taking a close look in the contribution of human capital on the economic development of developed countries.
A. Human Evolution
The development of man and society in general is attributable to the changes and improvements in his/her general environment. According tol (2005, 6) the environment of man has been subjected to a massive biospheric evolution subsequent to World War I. This means that this period actually triggered the most recent development in the environment of man, one that is highly related to the formation of massive economies. In the said work, these changes are characterized by a couple of processes: phyletic gradualism and punctuated equilibrium. The former indicates the gradual change of the environment in general. Specifically, the said change entails the evolutionary alterations of the species and the creation of new organisms. Thus, this kind of change represents the slow and snail-paced progression of the environment. On the other hand, the context of punctuated equilibrium represents a sort of antithesis of the former. This means that said bispheric process represents the fast and rather immediate changes in the context of the environment of man.
(2005, 7) added that the development of the technological environment of man have shared similar characteristics with processes of phyletic gradualism. This shows that the evolution of man’s pursuit for development has acquired an unhurried pace. Smil pointed out examples like the waterwheels and its rather slow improvement at the time. Nevertheless, it has been indicated in the same discussion that those developments in the environment of man came about rather discretely. This manifests that changes normally does not have a flair for the theatrics as Smil indicated. Small advance like the creation of the ballpoint pen (p7) have considerably changed the face of the human environment without him/her realizing it.
At any rate, these changes in the environment of man, either man-made or naturally occurring, contribute to the general knowledge economy of human development. 2005, 13) The pursuit of ideas and their subsequent realization contributed more to the need of man to develop and seek avenues that would cater to this rapid development. As early as the pre-WWI era, man has realized that there are things that need more understanding and he/she understood that with its understanding comes development in a more general sense.
It is a wonder how with these discussions ol (2005, 1) represent what seems to be the impossible feat of rapid change and the commencement of the modern world took place in an era where discontinuity is inevitable, WWI. This shows that the fate of man is bound for development and advancement regardless of any discontinuity that comes in its way. Be it an issue on peace, shortage of resources, or even the lack of commercial connections, man has found a way to challenge it environment and essentially took control of his/her fate.
B. Human Capital
Human capital has been noted in past and existing literature as one of the most essential elements needed for a state to competitively coexist with its contemporaries, particularly in the context of trade. Aon (2005, 30) indicated, increased trade is required for any state to be able to sustain faster growth. However, they also claimed that to effectively make that into a realization, then the improvement of human capital should be one of the basic courses of action engaged with by states.
A close consideration on knowledge and learning should be among the basic elements that states should consider particularly with regards to the creation of policieon (2005, 30) indicated that countries may benefit from improving the learning environment of its country by installing more technology sectors. In this manner, the country could contribute to the external development of technological elements and at the same time it provides the state the available venue for its students to learn.
One example that has been noted in the discussrlton (2005, 30) is the use of comparative advantage. In the case of the South Korean setting, they have focused its energies towards the improvement of their agricultural sector. Specifically, they have placed their sights towards the improvement of rice crops. Nevertheless, the government of South Korea realized that despite this rather promising future in the export of agricultural foodstuff, their economic performance will continue to lag behind other economies. Thus, policies that pointed to the expansion of technological capabilities are ratified. Today, South Korea is one of the top nations that hold high technological expertise as among its competitive advantage. Specifically, majority of its training networks have been concentrating on improving the technological skills of the country’s human capital. In fact, the country is one of the top manufacturers of automobile and other motor vehicles in the Asian region.
(2005, 30) also pointed out the importance of government intervention in improving the human capital of the country. This still emphasizes the need of policies complementing education and improving the knowledge economy of the state. In addition to that, the proper implementation is similarly required such that states could steer clear of any market failure in the future. (p31) This is especially needed when countries seek to follow the path of South Korea in finding a different comparative advantage and building on it.
Today, countries that need this the most are the developing countries and least developed countries. (2005, 87) These are countries that have limited resources and limited human capital. This scarce nature of resources among these countries adds up to the need to make such endeavors right the first time. Second chances are rather rare for these countries.
C. Human Endeavor and Achievement
The ability of man to steer his fate has been reflected on his endeavors and achievements throughout his existence. According toi (2002b, 179) these are manifested on technological and artistic outputs made by man throughout the years. Both represent the potential of the human endeavor to visualize things on a grand scale and eventually realizing it to its actual magnificence. In terms of technology, it manifests the inherent interest of man to actually improve his/her environment. This intention to essentially develop has been marked by numerous successes despite of even much more failures. Be it crumbling granite intended to reach the heavens or bridges that eventually crumbled even before it has been completed, the resolve of man to excellence is beyond boundaries.
As stated by Faulkner 2002b, 179), man will prevail. Fair enough, the inherent ability of man to adapt and essentially develop is not the sole reason for this “immortality.” (p179) On a more profound scale, it is the soul of man that enables him/her to not only endure but also the keep on living on the top of the world, wielding his/her weapon of empathy and survival. To this degree, Faulkner indicates the capability of man and the importance to hone these capabilities such that it would benefit the community as a whole. The importance of pointing out these represents the importance of human capital in society. In terms of improving his/her environment, man is not afraid to “reach the unattainable dream.” 2002b, 179)
In the context of art, man’s failures apparently are paradoxically one of man’s greatest achievements. 2002b, 179) Not having endured such letdowns denotes the inability of man to push the limits of his/her environment. Thus, having failed represents man’s tenacity to push the bar even higher such that developments could actually take place. In the presence of ever-changing moods both in art and technology, the persistence to evolve kept human being in a perfectly imperfect state. This means that there is always room for change, improvements to say the least. Regardless of the apparent deficiencies and flaws, the presence of these actually defines how the human capital is essentially valuable to the state. Feeding it with the necessary weapons of knowledge and skills through education and a high standard of health will essentially preserve the continuity of man’s development.
This part of the paper has indicated the resolve of man and the inherent capabilities of human nature to endure and essentially prevail. As Faulkner said, man is immortal. 2002b , 179) And the facilities that allow man to be in this state are not only its strength but also its deficiencies. Man will endure because he is flawed. It is these flawed nature that man will fundamentally require development and improvements in his environment. It fuels this drive for achievement, break records, and basically prevail over its previous failures. And to a certain extent, these capabilities are manifested in a period when man, along with his endeavors and achievements, had the opportunity to shine: the Industrial Revolution.
D. Industrial Revolution
One of the top phenomena that have highly influenced modern society is the emergence of the Industrial Revolution. To this extent, technology has been attributed to be the main element of such improvements and developments. Nevertheless, as discussed in the portion above, it is the resolve of man that triggered the advancements in technology in the said period. Moreover, the emergence of such evolution in society has also been triggered by significant influences to man and society. As De Gregori (2002b, 3) pointed out, the emergence of the industrial revolution set off the collapse of certain societal barriers. Specifically, he discussed that prior to such advancements in the Industrial revolution, elitism and intellectual snobbery was imminent in society. Apparently, there is this unseen barrier that serve as an intellectual apartheid in the pre-industrial revolution setting. De Gregori (2002b, 3) added that the importance of workers and their “tacit knowledge” were among the basic factors that has been added in society. Intellectual elitists thus have to deal with these workers because of this leverage. This tacit knowledge is characterized by De Gregori (2002b, 3) as those encompassing “subtle acts of judgment.” This point to the ability of the common worker to inherently discern certain elements of technology to that equal to what is commonly known as gut feel or common sense. This “unselfconscious” function of workers has instigated the capability of the common person to work with intellectual elitists in an equal ground. And this, as stated by De Gregori (2002b, 3), is not only one of the implications of the industrial revolution, but also one of its essential elements. The importance of human capital is thus represented in the emergence of the Industrial revolution.
Even in the current setting of development among countries, industrialization still is one of the major sources of growth in developed countries. Industrialization does not cease on its heels. As seen in the context of North America, Australia, East Asian “Tiger” Economies, India and China. (2005, 13) They were among the developed countries that made use of industrialization practices, along with its human capital towards its drive to development.
Other countries such as those in the South-East Asian region have also taken the path towards industrialization. (2005, 211) Although they have originally been considered as agricultural states in the second half of the 20th century, they have successfully acquired a pattern that would eventually trigger industrialization measures in the states. Malaysia is one such country that manifests this situation. Along with other ASEAN countries, their governments sought to ratify policies that would cater and complement the industrialization measures needed by the state to deviate from its originally agricultural setting. Up until the 1997 economic crisis, these countries have thrived towards the economic development in a considerably stable pace.
III. Technology
Another source of economic development that developed countries possess is the employment of technology. In today’s society, the context of development is often tied up with the elements concerning modernity. In this view, technology promises what is considered modern and views it in the context of modernity. 2002a, 147) However, along with the promise of modernity, there is also the impending issue of steering away from the status quo. With this appended issue on modernity, the use of technology should inherently have to contend with resistance to change.
Basically, this fear of changes brought about by technology is founded on worst case projections and pessimistic considerations of modernity. 2002a, 147) Critics of the modernity feed this fear of change. However, in order for development to actually take place, change has to occur. A shift from the status quo has to take place in such a way that society would be able to reap the benefits of modernity. This part of the study is going to tackle the use of technology as a means to facilitate change and consequently as means for developed countries to establish themselves in the competitive world. Specifically, the discussions will center on the importance of technology to economic development. The discussions will look into the efficient and intelligent use of technology, western technology, the transfer of technology, and accessibility as well as the need of instruction and training towards the use of such technologies.
A. Use of Technology Intelligently
As stated in the discussions above, technological changes initially intend to provide positive advances in society. However, that is not always the case. A lot of technological innovations have given society more menace than advantages. Take for example the case of the invention of Nobel, the dynamite. It was initially intended to provide advantages such as a new source of energy; however, the unstable state of the invention has turned it into a weapon of destructive power. As De Gregori (2002b, 191) indicated, the benefits of technology could be maximized if only it is used intelligently.
One such example given by the book of De Gregori (2002b, 190) is the mortality rate of children. Basically, a comparison of the rate of children death in the early parts of the 20th century and the turn of the millennium indicate a significant difference. This shows that the existing standards to which society depends on are significantly raised by advances in technology. In the case of mortality rates, the improvement of care particularly in the general well-being of the public represents that change imposed by technology.
De Gregori (2002b, 191) even contended that the critics of technology must realize that majority of the living conditions that our existence is based upon these days are held closely with technology. An illustration provided is in terms of the use of chemicals. He claimed that the use of such elements are not intended to poison or even change the constitution of the human psyche, it is intended more on the improvement of the physical attributes of man. Specifically, he noted that chemicals are employed medically to enhance the condition of human beings.
In this sense, developed countries may have used these technologies to enhance the condition of their own societies. The use of intelligent measures to deal with possible unpleasant outcomes may have been well studied and analyzed such that the repercussions are mitigated, if not totally averted. As with the earlier discussions, the importance of policies manifests itself once again. The use of technology by states is not the sole requirement now for development. As noted by De Gregori (2002b, 192) it is how states intelligently use their technology. Thus, policies ratified by states should be held in complete balance with the technological plans of the state, whether it is on areas like health or industries. Careful judgment aided by careful analysis will not put the state astray. In the same way, technological advances coming from the Western culture have pointed other regions of the world to the right direction with regards to how technology could be intelligently used. The success and failures of the Western countries in their use of technology have established the best practices in which the rest of the world could implement.
B. Western Technology
The Western society has been coined in history as among the very first to have achieved what is considered a modern economy. (2005, 11) Specifically, countries in Europe have been among the mostly influenced by the benefits of technology. In the work of Stiglitz and Charlton (2005, 11) they have noted the case of Britain as among the top players in the 18th century. This has been due to the pioneering works that most Europeans and British have done in the context of technology. With the expansion of the cities in Britain to a more cosmopolitan setting, the industrial activities along with the consequent technological advances in manufacturing has given the said country an edge over the other countries that were dominant at that period. Even today, Western technologies developed during the 18th century have instilled a major influence. Aside from actual innovations and gadgets, the western though has given the modern world a considerable amount of models and theories that are based on years of research. Though not entirely applicable solely to science, these theories similarly reflect on the context of the management of the organization and economic development of organized units.
In the context of industrialization, Western technologies have made an impact even as early as the first parts of the 20th century. The industrialization in the country of Japan manifests this influence. Specifically, the Meiji Empire of Japan has acquired Western technologies to improve the transport problem in the said nation. (2005, 11) In acquiring such improvements and technological advancements from the Western culture, the trading in Japanese territory has flourished significantly. With the eradication its initial policies of isolation, the Japanese leadership has commenced to the acquisition of a modern economy the moment it nailed its first railroad.
Along with the railroads, the Japanese government has also established certain institutions within the empire that will essentially complement the western thoughts and technologies they have acquired. (2005, 11) On a more specific note, they have also acquired educational and training systems that reflect western thought. To culminate this endeavor, the Meiji Empire has sent several of its top scholars to Western countries to learn the foundations of modern learning. They were sent to countries like the United States and some parts of Europe to learn modern math, science, and even foreign language. (2005, 11) With countries like Japan embracing and accepting the modern theories and technologies proposed by the Western world, it has been one of the first countries in Asia that have welcomed technology transfer. As seen in the current state, Japan is one of the superpowers in the world and among the most influential countries in the Asian continent. The recognition of the need for technology transfer from other cultures has worked on their advantage. With the amalgamation of both western technologies and theories with local values and principles, the Japan has come a long way since it has chosen to be inaccessible from the rest of the world.
C. Technology Transfer
With the emergence of globalization and internationalization, countries are now open to the possibility of accepting and giving out certain technologies to other states. In this scenario, developing countries are able to benefit from this especially if they intend to follow the path of industrialization of developed countries. (2005, 103) The trend towards the improvement of trading and commerce among nations has considerably heightened this possibility. And to a certain extent, the organizations that govern these trade agreements as well as the international bodies that encourage free trade among nations has a bigger share in promoting the transfer of technologies among its member states.
To illustrate, a world renowned agreement called the Trade-Related Aspects of Intellectual Property Rights (TRIPS) has infuse upon itself to encourage the transfer of technologies from state to state. (2005, 103) Specifically, the said international agreement has considerably influenced the technological and industrial policies of the member countries. (p103) To a certain extent, this agreement favors developing countries as it generates a much stronger intellectual property rights. As stated by Stiglitz and Charlton (2005, 103) it will essentially reduce the technological disadvantage of these developing countries. This means that they are protected in such a way that abuse from influential countries may be averted. Specifically, the technologies that these developing countries possess are protected from unwarranted transfer. Basically, the holder of technologies in such countries is able to charge certain financial amounts or even make demands to other entities outside their state provided that they are covered by intellectual property laws.
In the same level, the Doha Declaration of the WTO similarly realizes the potential of trade to ensure the transfer of technology from developed nations to the developing and less developed countries. (2005, 145) Moreover, the said declaration even recommended that an actual body be built to govern such issues of technology transfer. To add to the possible realization of the recommendation, the declaration even urged developed countries to establish a set of incentives that would rather persuade their local firms to transfer technologies to other countries.
However, there are still inherent problems that nations will face in their attempt to transfer their technologies. Certain provisions of international trading could also spell the end of the transfer of technology among underprivileged nations. To illustrate, countries that are considered new members of the WTO have reservations on implementing the coverage of intellectual property rights of firms from developed countries. (2005, 163) This is basically due to the fact that it could hold back the possibility of technology transfer from the developed country to their own. To deal with this issue, most developing countries have sought to implement a considerably long transition period to deal with their intellectual property commitments. This is what happened in countries like Cambodia, Nepal and Vanuatu. (p162) To boot, this endeavor is encouraged by the TRIPS agreement which effectively given developing countries an eleven-year transitional period to address their intellectual property commitments.
D. Accessibility and Need for Education
In the same way, the emergence of globalization has spawned the need for technology among every state. Technology has been the main “culprit” of the development and accessibility of commercial elements that are considered of high value. 2004, 168) As stated in the earlier discussions, technology has given the promise of modernity for states thus making the need for it essential. It has also been pointed out that this could be done through technology transfers from developed countries to less developed ones. gori (2004, 168) pointed out, the quest to modernity is an unending journey for countries. It is a continuing cycle. With the victories won and battles lost, technology has always been regarded as an important element. Be it the one lacking or the one that triggered the success, the use of such factors like technology, as stated earlier, should be dealt with utmost care and intelligence.
Human knowledge and culture has defined how technology is needed. 2004, 169) Essentially, both culture and knowledge could not develop with the absence of technology. In this context, one must also consider not only the importance of technology, but the importance of the capability of states to actually have access to technologyi (2004, 169) indicated in his work, the accessibility of technology brings forth a considerably larger opportunity for individual growth. This also means that the possible consequence of such growth in the individual scale is the general development of the population.
In seeing this perspectivori (2004, 169) shows that the continuing promise of modernity relating to technology is the subsequent unleashing of the potential of the population. As stated in the discussion on human capital above, maximizing the potentials of the human capital rests on the capability of governments to support the development of the individual. And the greatest medium that governments could implement this endeavor is by providing the individual sound training and education that will essentially build on the skills and capabilities to take charge on the technologies needed by the state.
In this section, it is thus established that the issue of accessibility of technology and the need for the subsequent education of the human capital regarding these technologies are the most pressing issues governments should tackle if they indeed seek continuing modernity. This could be done by governments by implementing policies that complement the technologies that they need. Ratification and implementation of such policies will allow for the creation of opportunities for the individual, and essentially for the entire state. All in all, the potential not only of the individual is “unleashed” but also the total capability of the government to establish measures and courses of action that point to the development of the state on the whole.
IV. Global Trade
Traditionally, the concept of global trade is basically to engage commercially with other business entities that apparently need the merchandise or services offered. This concept has been in constant presence even in the ancient periods of civilization. Early settlers from the west have been noted to have encountered trading vessels coming from the east years before the existing literature even used the term globalization. However, modern globalization has exposed the trading parties to certain risks that may well hinder commerce. More importantly, the issue of fairness and equality comes to mind when global trade is discussed. The guarantees on which abuse would not occur are still blurry especially on the case of less developed and developing countries. This part of the paper will be discussing how developed countries use global trade to their advantage. Specifically, the discussions will cover the issues of globalization in general, along with the principles of trade liberalization, and its effects on state policies and free trade. In this part, along with the reading materials, sources from the internet would also be used to draw a discussion regarding the issues involved.
A. Opponents to Globalization
Based on the discussions in the earlier parts of this paper, opposition to change is inevitable. Unfortunately, the emergence of globalization actually introduces change. Needless to say that globalization, despite having a considerable number of advocates, has equally numbered adversaries. In the book of De Gregori (2004, 153) he indicated that there are numerous organizations unrestricted from presenting their views as social protests for social changes such as globalization. Specifically, he noted the existence of non-government organizations (p153) as a potent instrument in putting forth certain political agenda to society. These “moral actors”, despite openly opposing the principles of globalization are still cautious and intelligently choosing their decisions on who to support and what agenda to push. (p156) This has been documented in the case of the Zapatistas in Mexico and the Ogoni movement in Nigeria. (p 153)
In this context, De Gregori (2004) points out that NGOs have placed a face on those who actually place opposition to globalization. In addition to this, the discussion implied that these organizations have presented themselves as aides to those in need. It is them who help those who have aggrieved by the unfair and inequitable conditions put forth by globalization. However, as De Gregori (2004, 160) pointed out, these organizations who claim that they speak for the poor and act on the welfare of the needy ironically have their own selfish agenda. And in the end, it is these groups that essentially decide on what should be heard based on what suits their principles.
B. Trade Liberalization
Developed countries from both the west and east has taken much of international trade with the intention of generally improving their economic state. (2005, 13) As stated in the earlier parts of this study, countries like North America and the East Asian Tiger economies have been among the top players in international trade. With their position and influence in the realm of global trading, other elements of that boost their economic standing are also influenced. According to Stigliz and Charlton (2005, 12) these countries’ industrial sector have benefited the most with their stature in international trading. However, they have also said that such improvement in their policies. In this context, the liberalization of trade in one of the top concerns of their trading partners.
Even before WWII, countries have taken measures to place trade barriers like restrictions and taxes on their laws. (2005, 12) These trade barriers are imposed on specific items coming from other countries in order to protect the local counterparts from being left out and even driven off the market. Such taxes and restrictions places advantage towards the local goods because these essentially places additional costs on the part of the foreign business. And normally, these additional costs are handed down to the consumer thus making the price of foreign made products more expensive as compared to the local brands.
After the Second World War, the trend of reducing these barriers has taken place. (2005, 13) This means that the drive towards the liberalization of trade has begun right after the discontinuity provided by WWII. In addition to this, economically developed countries have been in the forefront in persuading other nations to cut down the barriers of trade. To this end developing countries had heeded this call believing that the liberalization of their trading laws will essentially be an advantage for their pursuit of economic excellence. (2005, 13)
C. State Policies and Free Trade
In the pursuit for economic development, developed countries have acquired several courses of action that deals with their own issues of free trade. In the study on (2005, 14) developed countries of East Asia and Latin America has began to work its way towards economic development through certain changes in their policies on international trade. Generally, the East Asian countries have gone to a more export-oriented style with regards to their international trading endeavors. On the other hand, Latin American countries have acquired import substitution techniques to deal with their trading activities with other countries. 2005, 14)
Moreover, countries have to generate their own individual policies that will inherently suit their individual characteristics. To illustrate, countries like Japan and Korea built on their own conglomerates and companies to establish a worldwide competitive advantage. (2005, 15) Companies like KIA and Hyundai from Korea has been one of the most notable automobile brands in the Asian region. On the other hand, companies like Toyota and Honda has been the leading car manufacturers that originated from Japanese territory. In doing so, these countries have limited the inflow of foreign direct investments. Contrary to what the said countries did, Singapore and Malaysia built on their inherent r4esources to attract as much FDI as possibarlton, 2005, 15) Foreign companies and multinational corporations have flooded the gates of these two countries as they have fashioned policies that would cater to them. All in all, Stiglitz and Charlton (2005, 14) indicated that these countries from East Asia have developed in such a way that they have diverted themselves from widely accepted notions on the requirement of inequality. Specifically, they claimed that East Asian countries learned to develop on their own without the requirement of inequality and at the same time the initial stages of development were far from showing some increase of inequality. These conditions have been favorable to the environment to which these countries rest. Moreover, the initiative of the individual governments of the states mentioned has been able to install the needed policies and acted on them such that imminent market failures were remedied if not totally averted.
D. Global Institutions
This part of the paper is going to provide a description of the current global institutions that shape up the global community. Specifically, the discussions will revolve around the IMF, World Bank, and the WTO.
1. International Monetary Fund
The IMF was found in 1945, when the initial nations ratified its Articles of Agreee, 2002) The legal principles of the IMF at present are unchanged as when they were devised in 1944. The IMF’s authority in the international economy progressively augmented as it built up more signatories. The amount of IMF member states has increased four times from the initial nations caught up in its institution, replicating particularly the achievement of political sovereignty by a lot of developing nations. 2004) The development of the IMFs connection, in cooperation with the alterations in the international economy, has entailed the IMF to become accustomed in a selection of means to carry on serving its purposes successfully.
2. World Bank
The World Bank is a collection of five global organizations in charge for granting finance and counsel to nations for the reasons of economic growth and poverty cutback, and for supporting and protection of international investment. 1999) The group and its associates have their head office in Washington DC, with local bureaus in over a hundred member nations. It gives loans at favored rates to member nations, in addition to grants to the most poverty stricken nations. Loans or grants for particular projects are frequently connected to more comprehensive policy alterations in the segment or the economy. ( 1994)
3. World Trade Organization
The World Trade Organization (WTO) is a global, multilateral association, which institutes the regulations for the international trading system and decides conflicts involving its member nations, all of whom are participants to its more or less thirty accords. 2001) The WTO intends to boost global trade by encouraging lower trade obstacles and grant a stage for the concession of trade and to decide disputes involving member countries, when they take place. The objective is to assist producers and merchandisers of goods and services, exporters, and importers perform their trade in the world market.
The WTO has indeed opened the doors for nations to access on free trade. It has established rules that take into account the management of international trade and to monitor the dealings among the member states. However, there is still doubt on whether the processes involved in this organization resembles a democratic process which entails a more reasonable and even-handed playing field for the entire member states, not just a select few. Participation and accountability in these processes are required to make achieve this end.
E. Dispute Settlement in Global Trade
Organizations that seek to liberalize trade and lessen trade barriers among the member nations. This actually served as an impetus for countries. Specifically, the GATT was born out of the need to respond to the protectionist policies of the decades following World War I. At that point tariffs on goods shot up to an extent where trading partners in the international arena were not satisfied and similarly imposed higher tariffs in retaliatioar, 2003, 34) A group labelled the International Trade Organization (ITO) was born. Basically, the ITO claims to serve as a body that would ensure that agreements and negotiations among nations would enjoy an impartial and advantageous reduction of tariffs in order to promote international trade. It was in this scenario (1947) that the GATT came about. It served as an interim agreement among the countries who sought to be a member of the ITO. (1995, 12) The problem is that the ITO was never actually ratified after the US congress refused to deal with it. Though the ITO was never ratified, the interim agreement prevailed. Up to that point, the GATT still prevails as the governing principles in international trade. Though it is actually an agreement, not an actual organization, its principles continue to be adhered by participating countries. All in all, there have been eight rounds that completed the GATT negotiations. In its earlier rounds, the main purpose was to deal with the reduction of the tariffs on the nations seeking to be part of the agreement.
In the article oy (2003, 42), she noted that certain mechanisms under the GATT rules were imposed to manifest a “measured retaliation” among the signatories of the treaty. These include the use of safeguard in the agreement. As indicated in the Agreement on Safeguards, this initially served as a motivating factor for greater concession. This is seen in Articles XXVIII and XIX on the agreement. The former represents the option of the signatories to raise a tariff or even initiate a restriction on a temporary basis. The latter represents the option of the member countries to impose a permanent raise on the tariffs. In the same way, these safeguards were only reserved for situations where there are “unforeseen” circumstances that brought about increase in imports. (p42) The problem seen in this situation basically rests on the definition of “unforeseen” circumstances. As a result, this is used as a retaliatory tool among nations who have been hurt by the imposition of safeguards. Retaliation basically comes in the form of a similar increase in tariff on other products. (p45) It was not after the signing of the Uruguay Round that mended the loophole in the said international law. With the conclusion of the Uruguay Round, retaliation has been circumvented to all member countries by imposing a three year grace period from the use of these safeguards.
In the modern setting, the World Trade Organization is one of the governing bodies that regulate the trading between member countries. Along with these commissions, the organization is also tasked to govern over disputes and conflicts among the members relating to trade. Based on the descriptions of the retaliation mechanism provided by the WTO, one could surmise several objectives of the employment of such schemes. One important objective of the retaliation mechanism is to resolve any conflict. This is done through the exchange of facts and information to arrive at a commonly held solution to the conflict. This is seen in the Dispute Settlement Understanding where it clearly stated that the organization prefer to settle than to provide punishment to the parties involved. (
V. Conclusion
Developed countries are enjoying their current economic state because they are able to properly manage three elements that have great influence in their competitive advantage in the international scene: human capital, technology, and global trade. Essentially, with proper polices and proper implementation of such policies makes developed countries able to withstand crises and essentially prevail. As discussed above, human capital will essentially boost the potential of a state once it is given the tools to develop, tools like education and training will allow individuals to grow and hone their skills. In the same note, the proper policies of the state relating to the access to technology will also help this development significantly. The access of a country’s human capital to such technologies will inevitably increase their competitive advantage on a much larger scale. In so doing, states could concurrently be able to vie for economic dominance with other countries in the international market through global trade. However, it has also been given emphasis in this study that countries have to work hand in hand with their own governments. And at the same time, these governments have to create a thriving relationship with other countries as well as with global institutions such that economic development will not only be achieved but sustained as well.
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