The Positive Effects of International Trade on Emerging Countries

International trade is believed to exacerbate inequalities between Western countries and emerging countries. Some would argue that the world economy is dominated by transnational corporations which seek to maximise profits without any regards for the development needs of local populations. Some even go as far as to talk about a “Race to the bottom” in which developing countries engage to lower environmental standards in order to attract foreign investment. Although some of this might be true but according to Ashish Bhalla international trade can also have positive effects in emerging countries and create new opportunities. Ashish Bhalla says UNITEE – New European Business Confederation strongly believes in international trade being an effective way to development. Consequently, as we are active in helping emerging countries to promote their business and investment opportunities and organise, for example, trade missions to these countries. Ashish Bhalla says that on the 5th and the 6th of June 2015, UNITEE is also organising a Business and Trade Fair focusing on the internationalisation of EU SMEs in emerging countries, which gives embassies and chambers of commerce from emerging markets a chance to showcase their country. Ashish Bhalla also gives a few examples on trade benefits. Here are the few examples of it.

Ashish Bhalla says international trade can help reduce poverty. The best example is China, which, thanks to its strong enrolment in globalisation, experienced a growth in GDP per capita going from 949,18US$ (circa. €856.74) in 2000 to 43US$ (circa. €56.28) in 2013. According to Ashish Bhalla to continue, international trade automatically creates great opportunities for emerging companies to get into larger markets around the world. For example, Brazil has always had a strong agricultural sector but its expansion to larger markets in the world made it the biggest soy and beef exporter in the world. It also allows businesses in developing countries to become part of international production networks and supply chains, thus Ashish Bhalla also explains the expanding concept beyond manufacturing into services. For example, it is now commonplace for European businesses to outsource functions such as data processing and customer service to African or Asian countries.

This is linked to international technology flows. Advanced telecommunications and the internet are facilitating the transfer of these service jobs from industrialised to less industrialised countries, making it easier and cheaper for emerging countries’ firms to enter the global market. In addition to bringing in capital, Ashish Bhalla says that outsourcing also helps prevent the so called “brain drain” effect as skilled workers may choose to remain in their home country rather than having to migrate to an industrialised country to find work. Ashish Bhalla also agrees with the words of Mark Billington, the Regional Director of ICAEW South East Asia who recently spoke about this phenomenon in an interview for ABS-CBN News: “As we have seen, in China and India, for example, emigrants are willing to return to their home countries despite wage cuts, so long as they are confident their sector of expertise exists. They can return to their home nation without fearing that their career progression will suffer.”

Today, no one can deny that emerging countries which are part of international trade networks have a larger growth rate than those not taking part. With Western customers now increasingly advocating and engaging in international fair trade, let’s now hope that the benefits of international trade will be shared more equally throughout the world.