The Impact of Economic Globalization on International Trade Trends in Developing Countries at the Beginning of Third Decade

Said Mohammad Karim

Department of Management and Economics, Faculty of Humanities and Social Sciences,

Koya University, University Park, Daniel Mitterrand Boulevard, Koya – Iraq

  • Introduction

Currently, the world is experiencing a new scientific revolution in information, communication, transportation and technological knowledge-intensive. This revolution has deepened the globalization of all aspects of economic life of the movement of goods, capital, services and skilled labor. It became the technological revolution and in particular its part informational pivotal role. With The emergence of the phenomenon of globalization, which is the current stage of development of international economic relations, properties, and not put forward a new theory or a new perspective to understand the mechanisms of this development, and is a composite concept basically means examining the nature of the developments that have taken place for the international relations of economic, social, cultural and political dimensions, which makes impact on the trends of this development in the future.In other words, this might consider to be characteristics of the modern capitalist system.This is taking shape at the beginning of the Nineteenth and Twentieth centuries, which prompted researchers to give up the use of the concept of system, which necessarily involves the mechanisms and rules are clear and specific. Interested in studying changes in the relations between the inside limbs, in favor of the concept of globalization, which seems more neutral in the phenomenon of the more obscure and at the same time. However, this neutrality does not hide faith dimension inherent in it and which threatens the countries that rejected extinction and extinction, especially developing countries .premise from which this search extent to which developing countries of economic globalization and trade liberalization and the acceleration of goods and services flows, are developing their current state countries can to engage in the international economic system.

  • Concept of Economic Globalization

The current stage known a group of radical changes in the global economic system, predicted for the beginning of a new economic system characterized by milestones and trends are different from those prevailing before. Hence, the world is controlled by two trends which are linked and that they were separate, namely, globalization and economic liberalization.These two trends already taken place in switching conditions, the formation of economic behavior, and become more attached to influential tracks international national economy, and so became a success and progress to the strength of nations and blocs measured, this is even linked to the extent of participation or involvement paths of these two directions towards globalization, which has become prevalent even more dominant force in the world today, it was not coincidence. The return of the dream that accompanied the individuals since ancient times, to expand the range, mobility and investment, transfer of wealth and profit open broader horizons, as a result is made possible of the change in the international system, and the decline in the concept of a centralized economy or router to be replaced by the concept of a market economy, and its adoption as a tool essential for development. This concept, which stretch in all directions, is seen to the world as a single market, and thus is represents and embodies a vision based for a large segment of the countries that were leading and defending the principles of a free economy, giving the private sector a leading role. This means the predominance of the ideology of the free economy, triumph of the market economy, market mechanisms, and political liberalism. Consequently, globalization of the economy and on the scope of each of the international economy began to spread to all levels of production, financing, technological, marketing and administrative (Kella, 2011).

By taking a comprehensive look at the global situation, it can be said that the world has become more essential than ever before, and that the economical differences have become more acute and severe than they used to be and that the global distribution of income has become less balanced and less fair, though there is a large gap dominant to the world, it is likely to represent a serious threat to the growth achieved and the continuous development in the future.

The advanced industrial countries, which have committed themselves to the principles of free economy and previously defended him and worked on the publication, these countries are driving the global developments and designed a way that suits them.Because at this stage they have methods and the elements, it has a vested interest and potential of circulation, published and approved by the largest possible number of countries. These countries have prepared themselves in advance, who beneficiaries and are supported by an engine with motive to activate economic their income and activate its institutions list by exploiting existing possibilities and opportunities in the world.

However, developing countries that suffer from significant transitional structural and social problems, in most of these countries are still grappling with and affected by the global developments accelerating. All of these forces and trends formed with each other at the current stage the process of transition of the new global economic system. Which must be closer to the analysis of its components as well as determine the characteristics and features to identify the transformations and challenges and issues that began determined in the field of international trade, monetary system, manufacturing transport technology, preservation of the environment and other (Avhild, 2007). At this stage no wonder to show several terms reflect the features of the current stage, and even the future experienced by the transition process towards the establishment of a new global economic system, such as the term globalization or constellation or inclusiveness.

  • Technological Revolution and the New International Division of Work

The troubles of the existence of the technological revolution and information with the increasing freedom of movement of goods international capital may help clearly on the interrelationship and overlap between the parts of the world and confirm the global markets.Drop the barrier of distances between countries, and create a new type of international division of labor, which is the process whereby industrial productivity between more than one country so that the distribution of the components of any final product manufacture in more than one place. Thus it is no longer the main support of strength, as the economic capability is natural resources,  which it has become the main foundation in that to own advantage or competitiveness in the international arena, and which revolve around the cost and price and productivity and quality and is what the depth of the trend towards interdependence.

The emergence of new patterns of division of labor were not known, where the traditional image of the international division of labor is to allocate some of the country’s raw materials and mining and food commodity and specialty other countries in industrial products, and the assumption was that the country is developing a comparative advantage in the first type, while developed countries have a comparative advantage in industrial goods (Diab, 2010).

This division is no longer in line with reality, and the issue here is not just a shift in the comparative advantages of industrial goods to some developing countries, but what caused the technological revolution of the availability of new possibilities for specialization. This is due to the multiplicity of types of single products, for instance there is no one type of cars or radios or television or computer, but rather there are multiple types of needs and what type them in terms of production conditions may be different from what the other needs. Hence the division of labor between the different countries in the same products appears, and it has become fashionable, but mostly for a large number of consumer durables and machinery and equipment, that the same item appears in the list of exports and imports for the same country, this is known as the division of labor within a single industry.It has become fashionable to parcel one product among a number of the country’s production so that specializes every country in part or more, and this is known as the division of labor within a single product intra – firm.This kind has become of specialization of the most important aspects of the division of labor between the industrialized country and with each other, as well as in increasing cases between industrialized and developing the country.

Thus the decisions of production and investment become taken in accordance with considerations of economic rationalization in relation to cost and earning, even there has become an opportunity for many developing countries to penetrate the global market in a lot of products.Where new styles allow international division of labor to those countries gain competitive advantages in a wide circle of goods, and perhaps the experience of the Asian tigers in Southeast Asia, is the best example to that. The revolution in production was the occupation of knowledge of information relative importance of the first in the production process. Moreover, it is reflected in the emergence of new patterns of international division of labor, where the back of the division of labor within a single product intra – firm so that the distribution of the production of the various parts of a single item on the different countries of the world well be appear according to considerations of economic efficiency (Murray, 2013).

The new world economic system, which began to show its characteristics and features as well as is determined with the beginning of the nineties is still in the process of composition and formation conditions and compared to previous arrangements. It is noted that it uses new tools and methods to maximize the goals and objectives in line with the evolutionary stage – the stage of globalization – which reached and global changes that have taken place, and the new mechanisms that have arisen.Therefore, the dynamic characteristic of the new global economic system make sure day after day, as evidenced by the prospects for changing the balance of the existing economic powers on the basis of the future It is evidenced by the presence of more than one order of what will be the new world economic order in the atheist century the third millennium, some suggesting unipolar shape, some raised pyramidal shape, and othersuggesting parallel blocks shape.

  • Changes in the International Trading System at the End of Twentieth Century

The most important characteristic of a shift in the international trading system towards commercial freedom system after 1994 and the beginning of 1995 along with the establishment of the World Trade Organization – has included not only the liberalization of trade in industrial goods, but also included agricultural goods and other industrial goods such as textiles and clothing. This is in addition to the trade in services which is considered a turning point in international economic relations, and the liberalization of trade applied to services the principle of gradual liberalization and includes trade services, banking, insurance, capital market, transport of land maritime and air, contracting, tourism, telecommunications, and services such as professional technical consultancy and professional services offices. This encourages the phenomenon of labor migration or function instead of the labor force migration. In addition to the liberalization of services, it has included a shift in the international trading system, liberation organization, protection of literary, artistic property industrial, as well as liberalization of investment laws having impact on international trade restrictions.

The transformation of the internal orientation of any development strategy of import substitution to production for export is a result of the new trends of globalization and the great opportunities offered by the global market.This shift comes in particularly large number of developing countries. As a result, because the country has managed to developing high growth rates are achieved by the country has pursued a strategy of export-oriented development based on the exploitation of the potential of the global market to the greatest extent possible.

East Asia countries proved with a growing number of developing country success towards this direction. The international market can accommodate both availability which has the will to penetrate and it is important to complete the elements of export-oriented strategy, which works to promote the expansion of exports of products which features produced or can be produced present or future at relatively low cost compared to the rest of the other countries (Windsor, 2009). The export economy is a traditional long-term development process, is to put the pillars of transformation to be able to bring about changes restructuring in the economy, and that lead to the creation of diverse activities and sectors production structure uses the best technological methods, and earn exported products generally the ability to invade the world market. The strength become highly competitive, including corrects the position of developing countries in the patterns of specialization, and the international division of labor.

The profits from trade liberalization are not distributed evenly on the winners, both in industrialized nations or the developing countries. Hence, a according to the highest estimates is expected to be out collectively by more than 17 percent of the estimated increase in global income developing countries.The industrialized countries will get $ 100 million of the total expected in the world’s income as a result of partial liberalization of trade and of $ 119 billion which increases the share of the industrialized nations of the expected increase of up to 84 percent, and get developing countries to 10.3 percent. Despite those results, the importers of foodstuffs will be one of the most affected by trade liberalization, since the liberalization of trade in agricultural products, especially rice and oil, grain and wheat and uninstall support them by industrialized nations resulting in a rise in prices. On the other hand, it can be said that the distribution of gains attributable to developed countries obsessed by the global triad: the United States, Japan, and the European Union (Salih, 2006).

  • Nature of International Trade and Situation of Developing Countries at the Beginning of the Third Decade

Exchanges between developed and developing countries still in a large part subject to the international division of labor that prevailed after World War II. Accordingly, take it in the form of raw materials in exchange for industrial goods. Raw materials and for historical reasons  is an important part of the trade as well as developed countries providing the bulk of the trade of industrial goods in the world of the total exports of these countries towards the outside while the developing countries do not believe only a small percentage of the trade of raw materials in the world although it is part of the largest oil exports.Despite the fact that developing countries are the main source of raw but there are no raw materials in the industrialized countries and also exchange industrialized countries among them an initial goods. And some of these raw materials needed by countries of the South, and in general, a quarter of the value of exports of industrial countries to developing countries is equivalent to the value of all exports in the form of raw materials coming from these countries to the industrialized nations.International trade rolling is now a market of industrial goods. It can be conclude from this that the developed countries dominate the exports of all industrial goods and an important part of the raw materials we will review the exports of some of these products. However, this growth achieves significant differences between the various developing regions in addition to the contraction of world production growth.There are other factors behind the chill international trade such as the events that took place in the Middle East region, the changes in Eastern Europe, and declining terms of trade for developing countries rates (Salih, 2006).

On the other hand, the nineties identify the fast growth rate of international trade, and this is due in part to the rapid spread and flourishing trade in components of high-tech electronic goods. In spite of ongoing international trade, it grows faster than the speed of growth of total production. This is due mainly to the poor economic performance of developed countries. As regardless of an increase in global production, the rate of growth in developed countries has fallen as a result of the slowdown in production, which represents more than two-thirds of world production, and this is because of multiple factors, including the increase of public debt in most industrialized countries. Secondly, the growing pressure on European currencies as a result of deflationary monetary policies and their impact on exchange rates and interest rates. Finally, imbalances in the budgets of industrialized countries and that happened from the possibility of using fiscal policy as a catalyst for growth.

The beginning of the third decade has decrease in global production and international trade has reached lower global production rate levels since the eighties of the twentieth century, perhaps these reductions offered by global production and international trade through during this period returned mainly to the effects of the events of September 11, 2001, in the United States and that has touched most sectors in all regions with the exception of some Asian countries.

International trade continues to be a main driver behind the growth of the international economy, international trade and the growth rate is still in twice the growth rate of world output. The larger developing economies like China and India have seen continuous growth export activities. There are quite a number of developing countries made profits from the significant improvement in the terms of trade over the past few years, and due in large incision to the incident recovery in oil prices and some other commodity. On the other hand there are a number of oil-importing countries and exporting agricultural crops have been damaged from the terms of trade prevailing and suffered a loss, and in the light of high oil prices exceeded the proportion of the rise in prices exports of those countries as a result of the deterioration of commodity exports to those countries or for the two reasons together. Generally, the price of primary commodities has reached the top level and it is expected that many non-oil commodity prices are falling from the (United Nations report, 2005).

There is no doubt that the global economic changes that have evolved in the new world economic order will affect the developing countries, and that the global trinity economic and what raised from new issues in all areas reflect a new strategy aimed at pre-emptying the strategies most development self-reliant, such as those pursued by Japan and which star by the emergence of economic power to defy the developed countries such as Europe and America. This new strategy of developing countries pays adoptive development in the context of dependency of developed countries based on trade and foreign direct investment. That is why the developing countries adapt to what results this new trading system of the new patterns of international division of labor and toward greater economic interdependence.

 On the other hand, the investment and new issues on social paragraphs as measures of operating procedures, child labor … etc., are likely to act as an obstacle to humanitarian restructuring process. Under the trade agreement on the protection of intellectual property rights system is protecting the rights of the franchise strict and very accurate. Which may generate technological monopolies impede the transfer of technology on a global scale and that this will slow down the resettlement of industries operations. Moreover, the expectation of trade sanctions against countries that disturb the standards of work and child labor will give a significant adverse consequences for the transformation of the economies of low-wage and access to comparative advantages in the global market, and thus the new rules in the game of international trade and investment are likely to affect the recycling comparative advantage through cross-national companies and foreign direct investment process.

It is clear from all of the above, that the developing countries stand at a crossroads, choices are limited, either rejection. Therefore, isolation from the most important part and the most capable of the countries of the world, any part of the product of the progress of scientific and technological development, acceptance and as a result adapt to the international economic system that believes countries of the South that is uneven and unfair. For both options have to pay the price and the cost of each will be incurred (Zakey, 2000).

There are many who are interested in development affairs in the countries of the South incite rejection and call for an alternative think it is more useful to developing countries and their peoples, and is to increase the level of coordination and cooperation between these countries and clustering, if possible, to cope with the new realities in the global economy in order to modify or influence at least for the benefit of the South, and in spite of the theory of gravity for this option. However, the potential application of the facts to face many difficulties and obstacles, including economic limited capacity of the countries of the South in their current state, although it is under the South title meant a large group of countries a population of over 80% of the world’s population but they do not contribute to global income by more than about 20% and more than one billion people live below the poverty line as their share in making scientific development and technological progress modest negligible on a global level.

In addition to the low level of the will of the decision-making circles in these countries to develop the level of cooperation and coordination among them, in one hand to cope with the global economic system, on the other hand to cope with the global economic system. For developing countries to deal more rational and more open to the new economic variables, and working on extensive and comprehensive review of the development of its policies in preparation for the re-formulated in line and the new changes, and the development of economic mechanisms, including work contributes to better exploit the potential available and possible resources (Amin, 1997).

To conclude based from the above point, the new world economic order still needs to be repaired in its mechanisms and the functioning of its institutions, and reconsider the rules, whether in the field of trade, investment or other even it has the consent of the countries and the peoples of the developing world and the developed alike. It also notes that the new global trading system caused a sensation about his future, especially after widespread protest movements against globalization and its mechanisms.

  • Conclusions

 

  1. Developing countries in general face significant challenges may direct to gains, since if overcome, and could direct to losses if these countries unable to cope the changes.
  2. Reduce significantly the level of protection for the agricultural sector over the next few years, as it is also a most important sector in the economies of most developing countries that have a negative impact and unexpected results.
  3. These countries can draw its policy improvement and the development of their economies, especially with regard to the national production, which it is devoid of protection or low level of protection. There is no valid one answer for each of developing countries, and dealing with the issue of this importance vary from state to state depending on their circumstances and their potential.
  4. The abolition or reduction of subsidies for some products well weakens the competitiveness of developing countries in global markets.
  5. Progressive liberalization of services trade will lead to heightened competition in the global services market, and because of the weakness and fragility of the services sector in developing countries, especially the financial services activity of banks, insurance companies, Projections indicate that this sector may be affected negatively as a result of editing.
  6. The unit controls the commercial multi-density expansion parties and restricted the use of some selective economic policy that had a role in the success of the exports of developing countries tools, is no longer possible in light of the increasing liberalization in the international capital markets.The globalization of production of transnational corporations imposes legislation and laws on companies in relation to the objectives of the industrial policy of the host country. here it is emerge a conflict with the important role that practiced by governments in most developing countries, and especially industrial policies to accelerate structural transformation and strategic in the economy by supporting certain sectors identified as strategic to own comparative advantage kinetic potential task and receive so government support.

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