IntroductionOn the onset of the 21st century, vivid changes have been witnessed within the economies of the globe. This has been sparked by the profound advancements of globalization that has resulted to significant changes in technology. Additionally, technology has led to the advent of new and powerful rivals such as India and China and more specifically, the nations in the region of Asia-pacific (ECLAC, 2008). As a result, most countries have shifted the way they draft their policies in order to realign with the new dawn. The rapid process of globalization has changed the way domestic policies are drafted.
Policies in 1960s were more inclined towards increased local economic and industrial advantages. It is prudent to acknowledge that globalization has enabled emerging and developing countries to take advantage and seize the opportunity hence, gaining in growth of investments and trade (Berna, Semra, & Civi, 2005). This is due to the fact that globalization is happening under a competitive environment. Additionally, there has been witnessed creation of more active multilateral trading systems such as WTO and GATT. This paper is going to explore how the composition of trade has changed since the 1960s both within and between different countries. Globalization and how it has changed trade composition between countries since 1960sTo start within, globalization can be defined as the expanding interdependence of nations caused by the increase in integrations of people, finance, trade and ideas in one global market.
Cross-border investment and international trade flows are the major components of this integration. This process of globalization started around 1960s and gained momentum in the mid-1980s and it has been steered by the two main components (worldbank, 2013).
The first component is advancement of technology that have resulted to reduction in cost of computation, communication and transportation to a degree that it is often economically viable for a company to situate various production phases in different continents or countries. The second component is the increased liberalization of capital market and trade. As opposed to eras of 1960s, governments have rejected the calls of protecting their economies from foreign competitors through nontariff and import tariffs barriers like export restraints, import quotas and legal prohibitions. The research data indicates that globalization has hugely elevated the trade within countries and between countries within East Asian Economies like China (Hong Kong), Singapore, and Republic of Korea (Rajan, 2001).
However, it is imperative to acknowledge that not all developing nations have grabbed the opportunity presented by globalization in order to reap the benefit of it. It has been confirmed that apart from some nations in Latin America and some nations in East Asia, developing nations have been a bit sluggish to incorporate in global economy. The portion of Sub-Saharan Africa in global economy has reduced increasingly since the late 1960s, and the percentage of major oil producers reduced more with the reduction in prices of oil in the early 1980s.
Changes in Multilateral Trade Systems since 1960sCountries have been forging for multilateral trade systems in terms of trade agreements. The first ever-modern regional trade agreements were initiated in the early 1960s. Although it is until 1990s that regional trade agreements gained momentum around the globe. The trend begun with the creation of sub-regional pacts like MERCOSUR (Southern Common Market) formed in 1991 between Uruguay, Paraguay, Brazil and Argentina; the integration of the European Union, including the starting of the common market in 1993, and the strengthening of the ASEAN ( the Association of Southeast Nations)in the mid-1990s, and, the maybe the more conspicuous, the 1994 creation of the NAFTA (the North America Free Trade Agreement) between the Mexico, Canada and the United States (Antoni, Kati, & Christian, 2012).