History reminds us that whenever we went for protective measures, we found ourselves into deep trouble. On the contrary, whenever we advocated the cause of the Free Trade, we witnessed recovery and boom in economies. Although, the policy of free trade has some noticeable fallouts, these are not beyond the reach of our rectifying abilities. Undoubtedly, now, we need a better free trade system for today’s globalizing world. By providing appropriate, feasible measures with the aid of affected as well as potential stakeholders, we cannot only minimize the numbers and strength of negative impacts but also enhance the quantity and reach of the advantages in the global economy. Let’s see free trade system for globalizing world.
Economic integration for better free trade system
More Economic Integration is a potential solution for ongoing job losses. The “stoIpper Samuelson theorem” explains why abundant factor is intensively used in export industries whereas scarce in import competing.
Likewise, the problem is related to import competing industries in which majority labors are unskilled. On the other hand, outsourcing is equally affecting the prospect of skilled.
The major underlying factor is differences in factor prices. The “The factor proportion theory” suggests that the factor movement is the best substitute for the movement of the goods and services. In the developing countries, the structural change is responsible for the short term structural unemployment.
Most economists agree that this is short term and its effect will not last long because market will adjust itself.
Now onward, any further protectionist move will further escalate problem and might create difficulty for others as it shrinks the size of the market.
Our past experiences suggest that nothing would be achieved by barriers but depression.
Other option such as compensation might provide some relief but its sustainability is a matter of debate because there is hardly any yardstick to measure the incurred losses as well as to decide the amount of compensation.
Unquestionably, the most possible solution is more liberalization and economic integration as these options have great potential to re-correct the ongoing situation.
Hence, economic integration should be at the centre place while designing free trade system for globalizing world in the twenty-first century.
It can open the new areas for employment generation. Further, it will help in realizing the unrealized market potential and the unemployed can be absorbed by upgrading their human capital in the more productive activities.
As we know that the share of primary sector in GDP is decreasing continuously with our progress. Moreover, suggested higher degree of economic integration definitely can help in the equalizing factor prices across the world and can provide equal level playing field for all.
At the present, most of the countries are only in the second or third stage of economic integration. So, they have adequate scope to broaden their ambit of trade and development to provide required flexibility to the global market. Therefore, without sectoral balance, the feasibility of sustainable all inclusive free trade system in the today’s globalizing world looks dim.
Mutual cooperation for collective interests
Intra- nation or inter-nation disparity isn’t a complete outcome of Free Trade. It is logically wrong to hold it totally responsible. In case of intra-nation disparity, it is duty of respective governments to channelize the fruit of open market in the relatively backward regions, providing essential basic infrastructure.
Obliviously, no firm will pour its resources without adequate facilities. Hence, much of the investment is concentrating in favorable regions of the world.
On the other hand, inter- nation disparity is the product of protectionist approach by some when others were adopted economic liberalization. Now, it is too difficult to scale equally.
Hence, it is essential to adopt collaborative as well as complementary approach to get rid of it. One, respective government should adopt more economic liberalization. And, second they should concentrate on balanced regional development, providing basic infrastructural facilities.
Endeavors to transform Agri- Economies to withstand in globalizing world
It is undeniable fact that Agriculture is the mainstay of economies in the various nations. Mainly, these countries are either suffering from low productivity or chronic drought and starvation.
Most economists suggest to use drought proof genetically modified seeds with rainwater harvesting as the sustainable safeguards against famine and crop failures. It should have been implemented earlier but due to ethical misconceptions, it is yet to be implemented.
It holds key to increase productivity expand arable land, reduce follow land and might help in altering land use policy to serve broader interests.
Wastage of food is shocking and it is due to lack of adequate storage facilities and negligible food processing. Obliviously, focusing on food processing, strengthening storage infrastructure, technical innovations and training can change the entire situation. It can solve the problem of food, fodder, employment and income.
Moreover, agricultural subsidy in the high income countries is also the bone of contention. To compete with the developed nations, developing economies are compromising on the food producing areas. Its phased reduction will encourage both food security and further economic integration.
Most importantly, all the current maneuvering of protectionist policies are being done to protect the interests of unskilled workers. Without viable solution for this problem, dream of an ideal free trade system for our globalizing world will never be realized.
There should be Unity in diversity
Culture is inherited social resource which took thousands of years to evolve. It is a socializing enterprise. So, how could people alienate themselves from it?
Clearly, it is better to cultivate market with the help of culturally unbounded products.
Also, cultural friendly products could be another option but in only certain regions. For this, voluntary assimilation or peaceful integration can only ensure the sustainable co-existence of global stakeholders.
It is equally true that no one is going to sacrifice his or her standard of living for the sake of environmental protection.
So, mitigation is the only option and that we can achieve through multipronged approach.
First, environmental friendly technology with recycling capacity for pilling waste is utmost important. Current variety of waste is the product of either traditional or obsolete technology. In Urban areas the mountains of waste are going to pose a danger for developing nations where urbanization is yet to be matured.
Second, internalizing negative externalities in the economic development with the corrective taxes or carbon credit (Kyoto Protocol), is equally important.
Last, compensation for bystander in the form of social infrastructure or employment in the environmental developmental projects have great potential in lessening the impact of degradation without compromising developmental process.
Need to broaden the domain of regional blocs
It could mitigate trade imbalances by opening more areas to trade; can reduce trade disputes with ample alternative for export; and accelerate the pace of more economic integration across the world. All these measures looks too ideal to work but we don’t have other viable alternative. After all, we have to prepare ourselves to sacrifice something in order to gain some other.
It looks too difficult to make it workable but not impossible to formulate an all-inclusive, long lasting Free Trade system. Definitely, such system could not only provide the global economy a new leash of life to overcome the confronting difficulties but also empower all affected to flex their muscles to broaden the ambit of development to liberate impoverished.
To realize this, all potential stakeholders should sink their difference and return to the negotiating table to strike the balance. If not, any reverse swing might drive us into a corner as we experienced in past. As we know that without ours active co-operation, international institutions have limited scope to yield desired results. Hope better will come.