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Trade Agreements

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Trade agreements are the international agreements signed between countries to remove or reduce trade and investment barriers between the countries. Trade agreements are the major economic objectives for any countries growth or sustainability. To form a reciprocal exchange of concessions on trade barriers or to go for any trade negotiation by which the counties can improve their market reach and also can increase their economic status (Whalley, J ,1998).

Since the globalization has prevailed in the developing countries and when they started exploring with liberalization, it gave access for exchange of trade between the countries. Comparing with the industrial trading the developing countries which sign a trade agreement gains an improved economy as their products access larger economy. Talking about the NAFTA, which is known to be one of the world’s biggest trade agreement in which Mexico and Jordon are the developing nations which are supported by concessions (Chomo ,2002). Illustrating an example how the trade agreements can benefit a developing nation, the US industrial economy has a higher ration on the labour of the Jordanian economy, in this scenario the US have exported the capital-intensive good to Jordan and imported labour-intensive goods from Jordan. In this process the employment rate has increased and economical condition of the people change.

To the developing nations which participate in the trade agreements, there are several advantage: -

  • Higher employment rate
  • Decrease in child labour
  • Access to new potential markets
  • Increased life expectancy

Potential due to the trade agreements the private economy of the countries start expanding which can relate in exchange of technology, culture and mutual growth.

[pic 1]

From the above graph you can clearly see how the flow of investments have increased from the developed countries to the developing countries

Whalley, J., 1998. Why do countries seek regional trade agreements?. In The regionalization of the world economy (pp. 63-90). University of Chicago Press.

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