Political Economy Of International Trade Questions Long
The main factors influencing trade policies in emerging economies can be categorized into internal and external factors. These factors shape the trade policies of these economies and determine their approach towards international trade.
Internal factors:
1. Economic development: The level of economic development plays a crucial role in shaping trade policies. Emerging economies often prioritize economic growth and development, and their trade policies are designed to promote exports, attract foreign direct investment (FDI), and enhance competitiveness in global markets.
2. Industrial structure: The composition of industries within an emerging economy influences trade policies. Industries that are globally competitive and have comparative advantages are often supported through trade policies such as export subsidies, tax incentives, and protectionist measures. On the other hand, industries that are less competitive may face restrictions or be subject to import substitution policies.
3. Political considerations: Political factors, such as the ideology of the ruling government, domestic pressure groups, and public opinion, can influence trade policies. Governments may adopt protectionist measures to safeguard domestic industries and protect jobs, especially in sensitive sectors. Conversely, governments may also pursue liberalization and open trade policies to attract foreign investment and promote economic integration.
4. Institutional capacity: The institutional capacity of emerging economies, including the effectiveness of government agencies, legal frameworks, and regulatory bodies, can impact trade policies. Strong institutions are essential for implementing and enforcing trade agreements, resolving disputes, and ensuring a transparent and predictable business environment.
External factors:
1. Global trade regime: The rules and regulations of the global trade regime, such as those established by the World Trade Organization (WTO), influence trade policies in emerging economies. Compliance with international trade agreements and the desire to access global markets often shape the trade policies of these economies.
2. Bilateral and regional trade agreements: Emerging economies may enter into bilateral or regional trade agreements to enhance market access and reduce trade barriers. These agreements can influence trade policies by promoting trade liberalization, harmonizing regulations, and facilitating economic integration.
3. Technological advancements: Technological advancements and innovations have a significant impact on trade policies. Emerging economies may adopt trade policies that promote technology transfer, encourage research and development, and protect intellectual property rights to enhance their competitiveness in global markets.
4. Global economic conditions: The global economic environment, including factors such as economic crises, fluctuations in commodity prices, and currency exchange rates, can influence trade policies. Emerging economies may adopt trade policies to mitigate the impact of external shocks and protect domestic industries from unfair competition.
In conclusion, the main factors influencing trade policies in emerging economies are economic development, industrial structure, political considerations, institutional capacity, the global trade regime, bilateral/regional trade agreements, technological advancements, and global economic conditions. These factors interact and shape the trade policies of emerging economies, reflecting their unique economic, political, and social contexts.