ECO320: Evaluating Outstanding Trade Problems in the World Economy

This blog post, written for an ECO320 assignment, delves into the significant trade problems plaguing the world economy. It highlights the challenges faced by developing countries in the face of highly subsidized developed nations, particularly from the US and Europe. The post discusses the role of the WTO and the issues arising from the DOHA round, including subsidies in agriculture. It examines the impact of tariffs, quotas, and intellectual property rights on free trade, and how these factors affect market access and economic development. The author emphasizes the importance of government policies, global subsidization, and the need for WTO and IMF to support developing nations. The post also addresses issues like competition policies, investment, and the growing level of economic inequality. The author concludes by emphasizing the need for policies that minimize inequality and regulate subsidies, drawing on references from academic sources.

Running head: International Economics
International Economics
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1International Economics
What are the outstanding trade problems facing the world economy today?
Free trade is associated with the concept of removing the barriers that are faced by
modern economy. Developing countries has to face highly subsidised US and European
countries. The developing countries may be highly efficient compared to highly subsidised
developed nations but some other kinds of problems in the form of weak government policies
and weak infrastructure is mainly creating a menace. The DOHA round is mainly aimed in
mitigating the problems that are mainly associated with WTO and its agreements. However,
in the DOHA round one of the main problem that has been highlighted is the provision of the
subsidy (Rivoli, 2014). Some of the countries like France and US are highly depending on the
subsidy from the government especially in the agricultural field. Tariffs, Quota and
intellectual properties are one of the main problem that has been faced by modern economies.
Free trade has forced WTO to remove the barriers and it has been seen that with the removal
of barriers the developing countries has got immense help in developing their infrastructure
and through the unhindered export and imports the countries has focussed mainly on the
collection of foreign exchanges through the export and import of the products. Most of the
developing nations are selling agricultural products (Hall, 2015).
Even the developing countries faced problems in exporting the products to the other
countries in earlier days due to the existence of tariffs and quotas in form of product quota.
Tariffs used on them was extra burden on these countries and this tariffs would have
increased the price of exports or terms of trade for developing countries. Getting access to the
markets of EU and US, the developing or less industrialised countries had to depend largely
on the government policies. On the other hand, developed or highly industrialised countries
are having huge amount of money as the government is playing a crucial role there. From the
point of view of global subsidisation, it is highly important for WTO and IMF to reimburse
the policies of international trades with most monetary favours to be channelled towards the
developing nations (Monshipouri et al. 2017). Even some of the factors like competition
policies, investment and production procurement is also hampering the benefits of free trade.
Both the import and export quotas that had been previously established by WTO had
disrupted the domestic economy.
Most of the developing nations had taken the strategy of using local resources as the
developing countries have less access to the foreign reserves. Most of developing countries,
like India, South Africa is being given tough competitions from the developed nations in

2International Economics
terms of resources and use of capitals. Even some of the policies of WTO is channelling
towards the development of resources within the developed nation and by using the power of
industrialisation the developed nations are putting pressure on the WTO and IMF regarding
the debt management policies and by implementing quotas, they are putting pressure on
developing countries and forcing them to rely on them (Pomeranz & Topik, 2014). One of the
main problem that has been clearly visible is the growing level of inequality and this is the
main thing that has hindered the development of skills and potentiality of the employees. The
WTO and GATT need to set up policies that will minimise the level of inequality through the
resource channelization and resource distribution policies. Both WTO and GATT need to
decide the level of subsidy that could be allowed to developed and developing nations.

3International Economics
Reference list
Hall, P. A. (2015). Varieties of capitalism. Emerging Trends in the Social and Behavioral
Sciences: An Interdisciplinary, Searchable, and Linkable Resource, 1-15.
Monshipouri, M., Welch, C. E., & Kennedy, E. T. (2017). Multinational corporations and the
ethics of global responsibility: Problems and possibilities. In Human Rights and
Corporations (pp. 123-147). Routledge.
Pomeranz, K., & Topik, S. (2014). The world that trade created: Society, culture and the
world economy, 1400 to the present. Routledge.
Rivoli, P. (2014). The travels of a t-shirt in the global economy: An economist examines the
markets, power, and politics of world trade. New preface and epilogue with updates
on economic issues and main characters. John Wiley & Sons.