International Trade - Essay Example

IMPORTANCE OF POLITICAL REALITIES GOVERNING INTERNATIONAL TRADE International trade aims to flourish economies of countries who participate in exchange of goods, services, capital across international boundaries. International trade however, not only flourishes competition in region, it also enhances choices and variety for consumers thus not only profiting businesses and economies but also the end consumer. World Trade Organization (WTO) is an institution that has been set up to regulate and look after this aspect of trade.

This seems to be a win-win situation for all but there are some political realities that do exist and affect this whole process effectiveness (Hoekman & Nicita, 2011).Political realities do influence international trade. Countries that are facing political instability are most avoided for trade as there is great deal of uncertainty there, nobody knows when their policies do get amended and the trading partner has to face loss. Trade barriers such as tariffs and quotas are other political tools that are used by governments to control the amount and composition of international trade happening in their economy (Oh & Reuveny, 2010).

There are also some countries that avoid much trade with each other due to their rivalry and differences that eventually affect their economies. India and Pakistan, besides being neighboring countries avoid much trade with each other. However, unofficial trade continues between them for many years amounting around billions of dollars. US has imposed embargo over Cuba (Schwab, 1999); at the same time ongoing trade between mainland China and Taiwan shows an example that trade can even flourish even in the presence of hostile relations (Yu, 1997).

This world has now become a global village and there is huge interdependence of countries on one another. Under developed, developing and developed nations all require trade with each other to grow, sustain and flourish their nations. Importance of no nation can be undermine thus limitations of political influence is a better idea. As for today, no nation can survive and grow in isolationism (Fioretos, 2011).ReferencesFioretos, O. (2011). Historical institutionalism in international relations.

International Organization, 65(2), 367-399.Hoekman, B., & Nicita, A. (2011). Trade policy, trade costs, and developing country trade. World Development, 39(12), 2069-2079.Oh, C. H., & Reuveny, R. (2010). Climatic natural disasters, political risk, and international trade. Global Environmental Change, 20(2), 243-254.Schwab, P. (1999). Cuba: Confronting the US embargo (p. 143). New York: St. Martins Press.Yu, L. (1997). Travel between politically divided China and Taiwan. Asia Pacific Journal of Tourism Research, 2(1), 19-30.