Globalization and Social Modernity

This assignment delves into the complex relationship between globalization and social and intellectual modernity. It analyzes how globalization, particularly through free trade agreements, influences societal progress and development. The discussion includes the benefits of free trade, such as economic growth and increased access to goods and services, while also examining potential drawbacks and challenges, such as inequality and cultural homogenization. The assignment emphasizes the role of international organizations like the WTO in shaping global trade rules and promoting fairness within the system.

Running head: CONTEMPORARY BUSINESS ENVIRONMENT
Contemporary Business Environment
Name of Students:
Student ID:
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Author’s Note:

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CONTEMPORARY BUSINESS ENVIRONMENT
Table of Contents
1. Introduction:................................................................................................................................2
2. Free Trade:...................................................................................................................................2
2.1 Benefits of Free Trade:..........................................................................................................3
3. Globalization:..............................................................................................................................5
Drivers of Globalization:.............................................................................................................6
Benefits of globalization:.............................................................................................................7
Issues with Globalization:............................................................................................................7
4. WTO:...........................................................................................................................................7
5. Regional Trade Agreements and WTO:......................................................................................8
Reality Different From principles:...............................................................................................9
6. Conclusion:................................................................................................................................10
Reference:......................................................................................................................................11

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1. Introduction:
Since the early nineties of the last century and with the conclusion of the cold war,
globalization is stated to be new calamity that has been dictating the world. From the period of
early 1700, globalization has become a significant part of the international trade. The outcome is
the materialization of the specialism in the global trade in terms of exchange of goods, resources
and services (Marx 2015).
With the ephemeral of time, globalization has become a phenomenon that is deeply
rooted. The result is, a product that has been constructed in the furthest part of the globe could
make an easy entry into the market that is positioned in some other part of the world. As this
trend has been becoming more established, intellectuals offered it with a theoretical assistance
for the synchronization of such inclination, and that backing has been World Trade Organization
(WTO). WTO has been one of the most powerful global bodies. The main aim has always been
in providing commercial interests along with any obstacles in the path of maturity and extension
of global business should be taken care of secondary.
This paper would be highlighting the role of the European Union in going against the
spirit of free international trade applied by WTO. Globalization has been the result of free or less
limited trading in goods, services along with capital among several nations. However, there
several confronting issues that limit the growth of international trade like financial assistance,
trade barriers and violation of the intellectual property rights (Stiglitz 2014).

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2. Free Trade:
Free Trade can be stated as a policy that is being followed by some of the global markets
where the governments of the countries do not limit imports from, or exports to, other nations.
Free trade is being exemplified by the Mercosur and the European Economic Area that have
traditional the open markets (Anderson and Yotov 2016).. Governments of many countries
restrict free trade in limiting the exports of the accepted resources. Other barriers that might
encumber trade takes in the import quotas, non-tariff barriers like the regulatory legislation and
taxes.
2.1 Benefits of Free Trade:
Free trade facilitates lower prices for the consumers, exports of increased nature, benefits from
the economies of scale and the bigger preference of goods. The benefits of free trade take in:
a. Theory of Comparative Advantage:
This takes into account that through specializing in goods where nations do possess a
lower cost of opportunity, there might be an increase in the economic welfare for all the
countries. Free trade has the ability in enabling the countries to concentrate in those goods
having comparative advantage.
b. Increased Competition:
With additional trade, domestic firms would be facing stiffer competition from abroad.
Therefore, there would be more incentives in cutting the costs and increasing the factor of
efficiency. It might avert the domestic monopolies from charging high amount of prices.
c. Trade is the engine of growth:

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World trade has augmented since 1945 at an average of 7 per cent causing this to be one
of the imperative contributors to the growth of the economy.
d. Economies of Scale:
If countries can concentrate in certain goods that benefits from the economies of scale
and lower standard costs, this is generally true for the industries having higher fixed costs or that
needing higher investment levels. The advantages of the economies of scale would ultimately be
leading to lower amount of prices for the consumers along with having greater effectiveness for
the exporting firms.
The European Union (EU) has taken up free trade agreements along with other
agreements with a trade constituent with many nations on global basis and is negotiating the
same with many others (Cavusgil et al. 2014). Under the present circumstances there are four
multi-lateral; areas of free trade within Europe. The EU allocates its single market with three
European Free Trade Association (EFTA) members via the agreement with the European
Economic Area, and the enduring EFTA member- Switzerland; via the agreements of bilateral
nature.
EFTA countries have been enjoying admittance to the world’s biggest networks of the
trade relations of [referential nature, covering about 80 per cent merchandise trade of EFTA
(Irwin 2015). The network prolongs to enlarge, mainly thanks to the determined agenda of the
negotiations. EFTA has also been able to sign Joint Declarations on the Cooperation with several
countries in improving the factor of cooperation as the possible first step in negotiating an
agreement of free trade (Hassoun 2014).
Some of the key economic and social influences against the policies of trade protectionist:

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a. Distortion of Market and Loss of Allocative Efficiency: Protectionism might be ineffective
and costly means in supporting jobs.
-Higher prices for consumers: Tariffs have been pushing up the consumers prices and shield the
unproductive sectors from real competition. They castigate the foreign producers encourages an
incompetent allocation of the resources both globally and domestically.
-Reduction in access of market for producers: Subsidies within exports depress the prices of the
world along with damage output, investment, profits and jobs in many of the lower-income
developing nations of the European Union that relies on export of primary and manufactured
goods for their development.
b. Inefficiencies in Production: Firms that are being confined from competition have little
incentive in reducing the cost of production. This can often lead to X-inefficiency and higher
costs of average.
c. Trade Wars: There is often this danger that one country of the EU would be imposing controls
on import that would be leading to retaliatory action by another primary to a decrease in the
volume of the global trade. Actions related to retaliatory augments the costs of importing fresh
technologies affecting the ‘Long Run Aggregate Supply’ (LRAS) (Gray 2014).
d. Danger of Overdependence: Free trade has always brought in danger of dependence. A
country might be encountering economic depression if its foreign trading partner has been
suffering from it.

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3. Globalization:
The world is becoming extremely globalized. The attention of the powerful nations along
with the corporations have been shaping the terms of global trade. In the democratic countries,
they have been shaping along with affecting the capability of the elected leaders in making
decisions in the interests of their people.
Drivers of Globalization:
a. Technological drivers:
As per Marx (2015), liberalized rules of training along with the deregulated markets have
lowered the tariffs and facilitated the foreign direct investments across the globe. The WTO and
the GATT (General Agreement on Tariffs and Trade) along with the opening and privatization
within Eastern Europe are some of the key examples of the fresh developments.
b. Market Drivers:
As the local markets are becoming more saturated, the prospects for expansion are
restricted along with global intensifying is a way most of the organizations select in overcoming
this situation. Common needs of the customer requires and the prospects in using channels of
global marketing and transferring marketing to some degree are also incentives in choosing
internationalization.
c. Cost Drivers:
Sourcing effectiveness and costs diverges from nation to nation along with the global
firms can take benefits of this matter. Other drivers of cost to globalization are the prospects are

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the chance in building global scale economies and the high product maturity cost under present
situation.
d. Competitive Drivers:
With the global market, global inter-firm opposition augments and organizations are
forced in playing global. Strong interdependences among the nations and high two-day trades
along with the actions of FDI support the driver (Baccini, Dür and Haftel 2015).
Benefits of globalization:
Advances within the communication and transportation technology, pooled with ideology
of free-market, have provided goods, services and capital unprecedented mobility. For example,
the Northern countries wish for opening the world markets to their goods and taking advantage
of abundant, cheap labor in the South (Hayes 2016). These countries have been using the global
financial institutions, such as, the International Monetary Fund and the World Bank Group along
with the agreements of regional trade in compelling the poor countries in integrating through
reduction of tariffs, privatizing of the state enterprises along with relaxing the standards of labor
and environment (Gaul 2016). Globalization opened up prospects in developing the economies
for improving the population’s living standards.
Issues with Globalization:
At the time of defining globalization, it tried in minimizing the influence of the negative
points and reinforcing of the positive ones. Some of the factors against globalization are lack of
control over certain markets in trade along with concentrating of the richness and augmented
social inequality factor (Altbach 2015). There is much dominance of the financial-speculative
economy over the factor of real economy.

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4. WTO:
The World Trade Organization (WTO) is stated to be the only global organization that
deals with the trade rules existing between the nations. At its heart are the agreements of WTO
that is being negotiated and signed by most of the global trading nations, ratified within their
parliaments. The goal of WTO is in ensuring the flow of trade remains smooth and inevitably as
free as possible.
The agreements of WTO are of lengthy nature along with being complex as they are legal
texts covering a broader activities range. They generally deal with agriculture,
telecommunications, banking, safety of products and intellectual property. Under the agreements
of WTO, the countries cannot normally differentiate between their trading partners. If any
country is being granted a special favor by the EU like lowering the duty of customs, it has to do
the same with all the other WTO member from the outside (Dür, Baccini and Elsig 2014). They
can also provide the developing countries with special admission in their markets. They can even
raise barrier to products that they think are being traded in unfair manner. Most Favored Nation
(MFN) takes in every country either lowering a barrier for trade or opening up of a market
should be done for all the same goods and services from the overall trading partners it has, rich
or poor, weak or stronger. However, going against the WTO’s has become a trend where
regional corporations often discriminate among the trade partners and seem to provide the
benefits only to those who in return benefits them the most.
5. Regional Trade Agreements and WTO:
Regional Trade Agreements are mainly here to stay and in all probabilities would
continue seeing an exponential extending along with deepening of the architecture. Over the

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period of past ten years a mutation has been witnessed of the conventional RTAs into the
agreements of extra-regional covering bigger areas that is simply beyond the reduction of tariff.
The multilateral system of the agreements of trade is generally been viewed as the efficient
method in negotiating the reductions in tariff, opening of the markets and settling of the disputes.
This would not be diluting the agreement that would be seek by WTO in ensuring consistency
along with compliance between the rules which is being negotiated at the level of multilateral
along with those at inter-regional and extra-regional extent. The work of WTO within the RTAs
area needs to be tempered by the recognition that they are significant species within the
ecosystem of global trade (Kohl, Brakman and Garretsen 2016).
The EU had been floating some interesting notions on defining the trade sustainability
based on the volume of trade and lines of tariff. However, any proposal assessment needs to take
into consideration the demands of the EU on the ongoing negotiations on Economic Partnership
Agreements with the countries of ACP. Some delegations have started modulating the expected
level of ambition related to the systematic facet of the negotiations of RTA. Nonetheless, the
different treatment for the developing countries needs to be one of the major components of any
rule of revised nature and needs to be a critical component of the RTA where there is a bit
unevenness within the playing field.
Reality Different From principles:
As principles things might sound good as is being believed by the vast preponderance of
the global nations for they have signed up to the WTO (Friedmann 2016). The factor of power
politics has meant that WTO has acknowledged enough criticism from several groups along with
the third world countries. It has often been seen that being opaque along with not facilitating
enough participation of the public has been common within many countries while on the other

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side they have been welcoming to bigger associations. The importing nations are not able to
differentiate the things that are being made while trading though this things sound good based on
the factors of non-discrimination and equality. However, the reality is that some of the national
laws along with the safety decisions and protection of people’s health and national economies
have been considered as barriers for free trade (Esping-Andersen 2017. ).
6. Conclusion:
It can be concluded that globalization can be seen as the most viable means of achieving
of social and intellectual modernity. Globalization has helped in bringing in free trade that has
signifies same rule for all, those certain regional bodies do go against the agenda of WTO in
offering the benefits to certain countries. However, WTO still has a firm hold on the free trade
agreements between the countries and ensuring a fair way is being followed by every nation as
per the agreement.

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Reference:
Altbach, P., 2015. Higher education and the WTO: Globalization run amok. International Higher
Education, (23).
Anderson, J.E. and Yotov, Y.V., 2016. Terms of trade and global efficiency effects of free trade
agreements, 1990–2002. Journal of International Economics, 99, pp.279-298.
Baccini, L., Dür, A. and Haftel, Y.Z., 2015. Imitation and innovation in international
governance: the diffusion of trade agreement design. Trade cooperation: the purpose, design and
effects of preferential trade agreements.
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L.,
2014. International business. Pearson Australia.
Dai, M., Yotov, Y.V. and Zylkin, T., 2014. On the trade-diversion effects of free trade
agreements. Economics Letters, 122(2), pp.321-325.
Dür, A., Baccini, L. and Elsig, M., 2014. The design of international trade agreements:
Introducing a new dataset. The Review of International Organizations, 9(3), pp.353-375.
Esping-Andersen, G., 2017. Politics against markets: The social democratic road to power.
Princeton University Press.
Friedmann, D., 2016. The Uniqueness of the Trade Mark: A Critical Analysis of the Specificity
and Territoriality Principles.
Gaul, S., 2016. The Technical Barriers to Trade Agreement: A Reconciliation of Divergent
Values in the Global Trading System. Chi.-Kent L. Rev., 91, p.267.

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Gray, J., 2014. Domestic capacity and the implementation gap in regional trade
agreements. Comparative Political Studies, 47(1), pp.55-84.
Halbert, D.J., 2017. The Curious Case of Monopoly Rights as Free Trade. Journal of
Information, 7.
Hassoun, N., 2014. Summary.
Hayes, J.P., 2016. Making trade policy in the European Community. Springer.
Irwin, D.A., 2015. Free trade under fire. Princeton University Press.
Kohl, T., Brakman, S. and Garretsen, H., 2016. Do trade agreements stimulate international trade
differently? Evidence from 296 trade agreements. The World Economy, 39(1), pp.97-131.
Marx, K., 2015. On the question of free trade. Arsalan Ahmed.
Stiglitz, J., 2014. On the wrong side of globalization. The New York Times, 15.