Critical Analysis Paper

Posted: October 17th, 2013

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Critical Analysis Paper

            The main point that is presented is that of global integration, or the presumed fact that developing countries stand a better chance of reaping economic development faster if they open up their borders to international trade. This has discouraged developing countries from focusing on laying domestic strategies for development. Rather, global integration is viewed as the new strategy where majority of developing nations seek to attract foreign investors within their borders. The policy makers have forgotten the importance of good domestic policies in a county’s economic growth, and they now focus on foreign policies as the main strategy to economic development, forgetting that development has to start at home.

From a comment by the United States Treasury senior official about Mexico, it is clear that global integration is the focus for many countries. The assertion required Mexico to enhance its security and reduce crime in order to attract foreign investors. The cause of the problem is not considered. What matters is making the country conducive for foreign investors. Some of the countries that wholeheartedly embraced the idea that opening up a country’s economic borders, in essence global integration, have realized it does not achieve its promise. Therefore, development is not realized from policies focused on one narrow edge. Rather, it is achieved by a wide range of policies ranging from macroeconomic to microeconomic structures. Despite the integration into the global policies, the developing world is yet to realize the expected benefits. Trade liberalization has not paid off well while financial integration in several occasions has caused financial crises globally.

Another major point to note is efficacy of policies. Their value is not based on whether the policy works. Rather, it is about when it is applicable to certain situations. Precisely, policies might be viable in certain situations at certain times, but they may fail in other situations. During different times such as the current impact of the 2008 economic crisis, policies such as labor guidelines have to be changed to deal with the situation. Focusing on idealistic global integration as the best orthodoxy limits the developing countries from focusing on other policies that are fit for their current issues.

Global integration and openness to trade advocates for lowering of trader barriers in order to allow easier trade among countries. No research, however, shows that this move is associated with economic development. Available research suggests that no correlation exists between average tariff and non-tariff barriers. On the contrary, available study shows that the convention of lowering trade barriers leads to a correlation between import tariffs and economic growth. Most wealthy nations lowered their trade barriers and tariffs as the got richer since they can afford to do so. However, this move is not appropriate for poor nations that are yet to develop. Lowering trade tariffs reduces revenues for the government in developing countries while at the same time availing low price goods to these countries, making it hard for their domestic goods to sell. In reality, lowering trade barriers will have a greater favor to richer countries with more to export since the developing world has little to offer. This makes competition unbalanced for the developing nations.