The paper "International Trading System and Villa’ s Economy" is a perfect example of a macro and microeconomics case study. The imaginary country is Villa, a developing country located in the Southern African region, with 48,687,000 people and an area of 1,219,912 sq km. This country has developed a great deal since World War II by undergoing a transition from an agrarian society into a modern industrial state. Today, Villa’ s economy is very diverse and produces a wide range of investment and consumer goods. A fifth of the entire continent’ s production comes from Villa. The mining industry plays a key role in Villa’ s economy.
However, in recent, the country has stopped depending on the export of raw materials, notably gold. Meanwhile, the mainstay of Villa’ s economy is foreign trade. More than half of this country’ s total GNP (Gross National Product) is obtained through export and import trade. The main exports include agricultural produce, raw materials, machinery, chemical products, vehicles and electric appliances. The main imports include plastic products, vehicles and chemicals. The main buyers of Villa’ s products include (from the highest to the lowest export revenue generated) Japan, Italy, USA, Germany, Great Britain and Zimbabwe.
The country’ s imports come mainly from Germany, USA, Great Britain, Japan, Italy and France (in descending order of value of imports). International trading system and Villa’ s economy Trade Liberalization For a developing country like Villa, liberalization of markets leads to unfair competition from the developed countries, which already have an upper hand by virtue of their economies’ strength. Many companies from Villa are unable to compete with multinationals that are based in developed countries. The gains derived from trade liberalization are small, sometimes because they are spread over a very long period of time.
The trade liberalization policy set up by the WTO also creates a provision for multilateral partnerships between a developing country such as Villa and trading blocs such as the European Commission (EC). Such agreements, too, do not yield any significant benefits because of the infrastructural imbalances that exist between them. Import protection Import protection is an important policy issue for Africa. Villa, like all other African countries, has required, as part of their commitments to the WTO, to facilitate the process of translating quantitative restrictions into effective tariffs, to bind all their tariffs against any further increases and to ensure that with time, they are reduced.
With this regard, Villa is required to observe transparency when imposing charges and duties applicable to various international transactions. However, WTO policies make tariff levels in Villa to remain very high compared to developed countries. There is a conflict between the liberalization targets set by the WTO and those that had been set by Villa prior to her entry into the WTO. The WTO does not have a policy that brings about harmony between a country’ s targets that the levels of economic stability recommended at the international level.
For instance, Villa had put in place a liberalization plan that was to be executed within five years, while WTO’ s plan was supposed to take eight years.
ReferenceDas, B 1998, The WTO Agreements: Deficiencies, Imbalances and Required Changes, Third World Network, London.