Efficiency of Trading Blocs and its Realistic Response to Globalisation

EFFICIENCY OF TRADING BLOCS AND ITSREALISTIC
RESPONSE TO GLOBALISATION
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Table of Content
Introduction................................................................................................................................3
Basic View about Globalisation.................................................................................................3
Trading Blocs at a Glance..........................................................................................................4
Factors Creating Trading Blocs.................................................................................................5
Engagement of Countries in Regional Trading Blocs................................................................6
Trading Bloc and Globalisation.................................................................................................7
Impact of trading blocs on globalisation....................................................................................8
Interests of countries in forming trading blocs..........................................................................9
Global competitive advantage..................................................................................................10
Disadvantages of trade blocs....................................................................................................11
Conclusion................................................................................................................................12
Reference list............................................................................................................................13
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Introduction
The following discussion is based on trading blocs and its impact on globalised market
transactions. Over last three decades, there has been a massive exchange of commercial and
industrial trade among various countries from different parts throughout the globe. This has
given rise to Globalisation on a vast scale. Furthermore, Globalisation has created many
opportunities for remote nations to connect with rest of the world via different means. This,
in turn, has resulted in the formation of trading blocs among nations to improve relations,
trade, economy and regional stability. The objective of this assignment is to deliver a clear
idea of Globalisation, its impact, advantages and disadvantages. In addition, the following
assignment will co-relate the concept of Trading Bloc Formation due to Globalisation and
advantages and disadvantages of the former as well as the later. The factors that lead to the
formation of these trading blocs and the parameters that affect the participation of the
member nations will be discussed. It will explicitly mention major trade blocs in the world.
There is also a discussion on objectives and its impacts on international community on a
broad spectrum. The reader will be enlightened about several types of trading blocs and the
theories behind them. The topic of globalisation is the topic that is discussed in the
assessment of this paper. The related aspects of globalisation are also discussed in the
assessment in order to give the reader a clear view of the topic.
Basic View about Globalisation
In Layman’s term Globalisation can be defined as the process of integration of markets from
different parts of the world via exchange of Goods, Raw Materials, Energy, Technology etc.
This can also be the exchange of Ideas, Values, Cultural Aspects and many other Parameters
(Wright, 2016, p.11). Because of Globalisation, it has become possible for one particular
nation to access the resources and facilities available in some other nation in exchange of
monetary units or any other goods. The advantages of trading blocs have criticised in both
prospects i.e. positive and negative.
Exchange of Goods: The transportation of oil and other natural resources from one part of
the world to another has become possible largely due to globalisation. The Oil Rich countries
like the Arabic Nations sell natural products to other nations that do not possess adequate
quantity of the same and have to suffice their demands and needs by importing. In exchange,
they provide the Arabic Nations, the materials that are not so in abundance there. Therefore,
it can be said that some specific group of countries have the advantage while exchanging
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goods. As opined by Rupert and Smith (2016, p.28) giant amount of product manufacturing
in a respective region is the threat to the global economy and still, after the formation of
trading blocs, the scenario remains at the same stage.
Work force and Technology Transfer: Apart from natural resources, there is another aspect
of trade that has come into play because of Globalisation. It is the Regional and Economic
Stability between different countries because of marketing of Final End Products like the sale
of Advanced Mobile Phones and Transfer of Technology. Countries like Japan and Sweden
have a tremendous production capacity of goods but ample work force is not available there.
Hence, they install their manufacturing plant in a country that can provide adequate labor like
China and India (Telò, 2016, p.41).
Economic, Regional and Environmental Stability: The Global Summits and meetings that
are held periodically among the group of countries are major steps towards strong and
balanced economic conditions of nations. Major groups include the European Union (EU)
that includes most of the European Countries, Asia-Pacific (APEC), which includes Asian
nations that share boundaries with the Pacific Ocean, G20 that consists of the developing
countries (Banerjee and Chowdhury, 2017, p.61). These formations result in cooperation and
support between countries in times of natural disaster, economic crisis and many other odd
scenarios. The discussion of Global Warming on an international G20 platform is a recent
example for this.
Trading Blocs at a Glance
A Trade bloc can be interpreted as a Group formed among countries that share common
interests in order to boost the trading activity and economic condition of the participants. This
is a type of agreement that is signed between the governing bodies of the participating or
even the interested nations (Chang, Chen and Saito, 2016, p.93). It is usually done to
eliminate or reduce the geographical, regional or sometimes even economic barriers among
the members. The resultant outcome of the trade conditions and the terms of the agreement is
in favour of all the nations that hold the membership of that particular trading bloc. In order
to make a critical evaluation, it will be better to say that it is the availability of resources to
introduce a particular trade bloc (Ghosh, 2016, p.102).
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