International trade
What is the trade? What are the main characteristics that have this type of commercial transactions? During the period of postwar international trade was one of the pillars on which emphasized to revive a global economy that had been severely beaten and devastated by World War II.
Europe was one of the areas most affected by war, not only in human casualties but also in infrastructure so the international trade between the countries of this continent and the world was null.
In the year 1947 the United States launched the Marshall Plan, as a mechanism to rebuild the old continent and thus open new opportunities for foreign investment and international trade. Thus North America finance the reconstruction project of European countries devastated by war, using foreign investment and international trade as tools to implement the project.
The idea of the Marshall Plan was a consequence of the change in mentality that took place in the United States during the Great Depression. The economic calamities in the thirties convinced many people that the free market not intervened could not guarantee the economic well-being, but that foreign and state investment were two tools that must be used especially when the circumstances demanded it. At this point Orthodox and liberal economists agree that international trade is necessary and therefore the only way to revive the economy.
In the early 70’s was the oil crisis triggered as a result of the decision of OPEC (Organization of petroleum exporting countries), which decided not to export more oil to countries that had supported Israel during a war of Youm Kippur , Facing the Jewish nation with Syria and Egypt. This decision affects the functioning of the United States and the countries of Europe, where drastically decreased foreign investment and international trade.
The fall in production of crude bailed supply on the market, but demand remains high, therefore oil prices rocketed and this directly affects the American economic model that was already exhausted. The devaluation of the dollar back then already exceeded the expectations of market analysts, this fluctuation of the price incentive speculative investment that was channeled through the hot money flying from one place to another in search of higher yields. The large profit margins that left this type of investment incentive millions of people to prioritise hot money above foreign investment.
The Marshall Plan and the oil crisis of 1973 were two historic events that took place in the twentieth century and are a clear example that there were moments in the world where foreign investment and international trade were privileged as a recipe for reviving the economy.
Globalization is another of the phenomenoms that incentive international trade. This new process which is part of the new world order has a dynamic that has a single thought determined by two concepts: market and neoliberalism, that is being sought that global markets will be integrated through the liberalization and deregulation to facilitate continuous flows of capital and thus encourage foreign investment and international trade.
At the beginning of Globalization, there born a new development model that finds in the foreign investment the way of its financing that is strengthened by the free movement of goods and services through international trade.
Globalization has greatly benefited the structure of foreign investment as it allows the liberalization of capital movements and the internationalisation of production, one of the essential features for the presence of Transnational Corporations that are the actors of the New World Economic Order.
The three most important contributions of international trade to the economy are.
• international trade means an expansion of industrial or commercial capital and a fresh flow of foreign currencies.
• Foreign investment and international trade arrives in countries where there is relative economic and politics stability. For this reason in developing countries such investment is lower.
• Landslides of the geographic barriers from the exchange of goods and services that are provided from international trade
The process of acceleration of foreign investment and international trade which saw the world in the last three decades of the twentieth century, is the product of political, economic and technological progress, that have joined together to make the world commercially unify and so other cultures can enjoy the goods and services produced by other countries,that’s why in the process of integration of the world from globalization the role of foreign investment and international trade has been very important.