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GET AN IN DEPTH KNOWLEDGE ON INTERNATIONAL ECONOMICS ITS SCOPE AND IMPORTANCE
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International Economics : Scope And ImportanceINTRODUCTION
Historically speaking, international trade is said to carry a touch of romance, a sense of the
unknown, and of unforeseen danger. In the tenth century, caravans crossed desert, and in the
fourteenth voyages of discovery, largely motivated by trade prospects, took adventures across stormy
seas to unknown continents. The British restriction on colonial trade helped to fuel American
Revolution. After World War-1 the waring nations of Europe began a new chapter of peace and
prosperity by concluding a peace treaty, the precursor of the present European Community. The
world has come a long way since World War II in freeing trade from many forms of trade restrictions
through the auspices of international negotiations such as those under the GATT and, most recently,
through establishment of the World Trade Organization. Competitive trade restrictions of the past
have to a significant extent, been eliminated. The world volume of international commerce has grown
tremendously since the last World War. Part of it is no doubt due to the cheapening of transport,
revolution in communication technologies, and reductions in risk because of insurance and
international trade laws. But all these could not have contributed much had it not been for
revolutions in realization that trade is an engine of growth and prosperity and isolationism is
anachronistic. But there are parallel ominous developments too.
Trade has also raised frustration and apprehension among large section of populations in
both developed and underdeveloped countries. Among them are innocent workers who have lost
their jobs from cheaper foreign goods, a price that international specialization and reallocation of
factors (in the face of relative immobility of labor) must exact. Many votaries of free trade are
growing skeptical about the claimed benefits of unhampered trade. Politicians, worried about the
consequences of having angry job losers on the electoral rolls are raising cries for protection. Issues
like large country vs. small country, rich vs. poor countries are surfacing regularly, especially with
respect to the division of gains from free trade. Should countries open up their economics? If so, how
would they, especially the poor ones, cope with shocks that spill over from across the border (and for
no fault of their own) ? How fast should it do so and in what sequence ? How are international
financial relations to be conducted? Does a country surrender a great deal of its autonomy in the
conduct of macroeconomic policies in the name (or for the sake of) global order? Can international
interdependence be so ordered as to ensure its smooth functioning and fair, harmonious
development ? What kind of supranational authority does such an order call for? How will its affairs
be conducted ? Will it lead to some kind of a world government? If, so what will be its contours ? You
can enlighten yourself about these and many other issues of international economics. But then, what
is international economics?
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