·      Engagement in international trade is a necessary condition for economic development, reduction of poverty and improved living standards 

·      Many developing countries have chosen a particular route of trade opening = preferential trade agreements (PTA) between North and South
-> for example: Accession to the World Trade Organization 

·      PTA: An agreement between countries that reduces the normal taxes on some imported goods, in the absence of a preferential trade agreement with partners outside Europe relies on the contractual framework provided by the WTO

·      Trade typically makes up a large shore of gross domestic product (GDP) for smaller, developing economies 

·      GDP: The total value of goods and services produced by a country in one year 

·      Trade Liberization requires societal actors (concerns/firms/workers)
-> financial instability, no education, poor infrastructure = characteristics of developing countries 

·      The vast majority of developing countries started out as commodities exporters 

ISI: Import-substitution industrialization = is a trade and economic policy that advocates replacing foreign imports with domestic production

GATT: General Agreement on Tariffs and Trade
-> an international agreement to end rules that limit trade 

The WTO includes a multitude of agreements affecting a nearly all aspects of international trade 

Moreover, the WTO now includes rules that affect national policies in a range of other areas, such as services (shipping, telecommunications, finance, movement of people), regulation of foreign investment, and IP

Basic principle: from shallow integration to deep integration

North-North and North-South PTA’s fall under GATT Article 24

FDI: Foreign direct investment
is a purchase of an interest a company or an investor located outside its borders 

Political trade dependence:  North-South agreements result in PTD 

·      Exporters have to make investments that are specific to the relationship, that is, to the market access to a particular country 

·      developing countries that use preferential schemes can become particularly dependent on their continued existence, because it is difficult to sustain any other advantage over competing locations= they often seek fully reciprocal PTA’s with the countries whose markets they also have a connection 

·      Political trade dependence contributes to the larger issue of asymmetrical interdependence in a trade relationship 

Infant argument:
less developed countries/productions needs to be established first, in order to protect the own national interest 

Security aspect:
some protectionist activities could prevent a dependency to western countries (especially when it comes to developed countries or third world countries) = hegemonic aspect/global power structures 

Free trade leads to economic growth and secures the political/global power for the country: liberalism is pushed because of its efficiency 

-> Many countries’ trade and industrialization strategies are unsustainable 

·      First proposed in the late 1950s by the Argentine economist and statesman Raúl Prebisch, dependency theory gained prominence in the 1960s and ’70s

·      According to dependency theory, underdevelopment is mainly caused by the peripheral position of affected countries in the world economy

·      Typically, underdeveloped countries offer cheap labour and raw materials on the world market:
These resources are sold to advanced economies, which have the means to transform them into finished goods

·      Underdeveloped countries end up purchasing the finished products at high prices, depleting the capital they might otherwise devote to upgrading their own productive capacity 

·      The result is a vicious cycle that perpetuates the division of the world economy between a rich core and a poor periphery

Does Liberalism work in/ for developing countries? 

There is no welfare system that could support the people, there is a possibility that the elite and rich people would become even more rich and the poor even more poor. The gap between the rich and poor would unclosable 

·      United Nations Conference on Trade and Development (UNCTAD)

·      EU, WTO: local and bilateral agreements/deals (for example: GATT) 

Critical view agreements
=> you have to question it, most of the time the dominant countries benefit from the deal and for the less developed countries there are more disadvantage for them 
=> can be linked to postcolonialism 

Example => Africa 

Consequences of the cold war
=> there is still tension between America and Russia and in addition to that China is rising as a new power state = lead the global market 

·      World Trade Organization 

·      Different initiatives and acts like Caribbean Basin Initiative (CBI), Caribbean Basin Trade Partnership Act (CBPTA), Andean Trade Promotion and Drug Eradication Act (ATPDEA), African Growth and Opportunity Act (AGOA) 

·      Fear of cultural loss because of free trade 
=> an example could be France and Africa or for instance Algeria 
=> language aspect 

·      Global market is westernized 
=> they state the standards – who is developed and who is not, who gives the right to the western countries to decide that 

In general, you can see a postcolonial frame when it comes to the global trade

·      Countries should focus on what they are good at, however they should not depend only on their natural resources 
=> for instance Saudi Arabia (only oil trading)
=> comparative advantage   

·      One can see that less developed countries still deal with the aftermath of the postcolonialism era  

=> economic, education and democratic structures 

=> and they are still oppressed