The Impact of International Trade on Developing Countries

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THE IMPACT OF INTERNATIONAL TRADE ON DEVELOPING COUNTRIES Abstract The very idea of free trade is to bring the third World nations of Latin America, Asia and Africa into a fair competition with, an economic parity, with Western countries. It has already been mentioned that the idea of a “borderless economy” is now a fait accompli. The world, therefore, no longer “consist of a series of closed national economies, each with its unique set and factors of production…But there is a problem with this view of the world. Today it is increasingly irrelevant… (we now)…confront…the inevitable integration of national capital markets into a single, powerful global market.”¹ ------------------------------------------------- ¹ Bryan, Lowell and Diana Farrell: Market Unbound, New York: John Wiley & Sons, 1996, p. x Introduction Globalization is a process of interaction and integration among the people, companies, and governments of different nations. A process driven by international trade and investment; aided by innovative technology. This process has effects on the environment, culture, political systems, economic development & prosperity, and on human physical well-being in societies around the world. While globalization is both a catalyst and a consequence of human progress, it is also a process that requires adjustments and the challenges of important problems. Free Trade and Its Effect and Meaning on Less Developed Nations Since the Second World War, and especially during the past two decades, many governments have adopted a free-market economic system, vastly increasing their own production potential thus creating new opportunities for international trade and investment. Governments have also negotiated reductions in barriers to commerce and have established international agreements to promote trade in goods, services, and investment. Taking

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