The importance of developing Countries Policies on Trade

Trade is an exchange of goods and services between buyers and sellers, while policy is typically described as a principle or rules to guide decisions and achieved rational outcomes.   So when you combine the two (Trade & Policy) together it describes setting clear standards and goals which can be understood by potential trading nations allowing them to run their businesses smoothly.  But many developing countries have not been able to utilize these concepts because of the deficiencies in their economic stability and structures, societal institutions and infrastructure.  But while these developing countries envelopment remains the principal focus of trade policy, they have become increasingly involved in regional and multilateral trade negotiations among themselves.  Because the multilateral system initiation, there have been substantial adjustments to the increased importance of developing country members’ response on reforms in governance and a shriller distinction between positive and negative approaches to integration seem likely to be needed.

Developed countries have the social responsibility to help developing countries achieve these goals, reason being, their liberalization of trade in services and the mobility of labor which are very important comparative advantage.  With developed countries flexing their regulations, it provides very substantial reductions in the trade policy and other barriers inhibiting developing country participation in world trade.   Developing countries have made dramatic shift in the pattern by shifting away from dependence on commodity exports to much greater reliance on manufactures and services, and greatly increased the importance of exports to other developing countries.  Also, there has been rapid globalization movement in the world in recent decades and the process appeared to hold broad support, but started to receive some resistance and sustained attack in recent years.

It is clear that the task to continue this process have become very much a policy question, and one with enormously important implications.  But one of the important features of the globalization process has been a major shift in the nature of the trading relations between developed and developing countries. This shift from dependence on exports of commodities to much greater reliance on exports of manufactures and services is sufficiently noticeable as to require reconsidering of old approaches to viewing trade and development as in export-led growth. It has also placed major pressures for change on the multilateral trading system as developing countries have become much more active participants.  Developing countries have to seriously get in the practice of the “Flying Geese” pattern of growth by gradually moving up in technological growth and emulating countries that are ahead of them in this process.