Examine barriers that exists against the expansion of trade in some countries

Trade has been a global economic drive for centuries, it has been argued as a crucial component in development and vital to a countries economy. Trade is the action of supplying a demand, exchanging something, often money, for a good or service. Influential Neo-liberal policies such as that of Thatcher and Reagan have proposed that free trade globally would propel many developing nations into development and provide further wealth for MEDC’s, however there are many barriers to trade that exist within countries despite the World Trade Organisations promotion of the free market and abolition or reduction in tariffs, quotas and subsidies.

Whilst trade is a human process, it could be argued there are physical barriers that restrict the expansion of trade. For example geographical barriers such as a country being landlocked can hinder access to trade portals and trade routes. Many nations such as the Democratic Republic of Congo are landlocked, meaning they have no access to the sea or a port, ports are thriving locations for trade and shipments of exports and imports, without a port accessibility to countries worldwide is reduced. For instance, exports must travel through transit countries to reach the coast before they can be exported to MEDC’s, this can incur costs and may have the potentiality for theft as many nations in Africa do not have regulations or adequate infrastructure. Furthermore, being isolated such as Madagascar or even Britain means reliance on ports and shipping channels in order to trade, without the benefits of trade routes via transport over land this may create a barrier to trade as a countries means to trade and access to trade routes is reduced. Being a landlocked nation or an island may present a physical barrier to global trade and therefore prevent the expansion of trade.

Neo-liberals argue the main hindrance to trade and thus development is the implementation of tariffs on imports and exports, quotas and subsidies. Tariffs create unnecessary and costly barriers to the expansion of trade, African nations for example have been suggested as “walling themselves off” from the advantages of global trade by introducing such tariffs. It could be argued in a globalised and interconnected world, subsidies within one country may present a barrier to trade within another, this is the case for Mali. Mali is located in Western Africa and is heavily dependent on the production of cotton crops, 3 million Malians are reliant on profits from cotton crops to survive. However, the US is the worlds largest cotton producer and one of the wealthiest nations in the world, this means the government can afford to give subsidies of up to $4bn per year to cotton farmers which in turn allows them to drive down cotton prices. US subsidies has depressed global cotton prices which has had an adverse effect on Malian growers, their profits from cotton no longer exceed their production costs placing them in poverty and stunting the national economy. US dominance in the global cotton market has had a negative impact on trade profits for Mali, reducing the opportunity to expand trade as it is not financially viable with current cotton prices so low.

A further barrier to the expansion of trade it could be argued is political regime. Whilst capitalism advocates free trade and emphasises the importance of competition, communism can act as a barrier to trade. Communist governments set prices on all commodities within a nation, therefore prices are often lower than that of the global market to encourage equality within the communist country, however this means communist countries cannot trade globally as their prices do not reflect the global market. Communist regimes also often keep themselves isolated from global trade as it is seen as a capitalist notion for the individual rather than the collective, this creates an ideological and political barrier to the expansion of trade as many communist countries refuse to trade globally, therefore trade is only within the communist nation and with prices fixed and competition eliminated there is no economic gain. As governments set tariffs, subsidies, prices and have power over their population, a communist regime may be a challenging barrier to the expansion of trade with no incentive to enter into the global trade system.

It could be argued trade is a part of global development and increasingly globalisation, trade between countries establishes not only a relationship but economic prospects. Trade has been behind Britain’s industrialisation and China’s growing dominance, however despite increasing development, rapid growth of NIC’s and LEDC’s beginning to emerge into secondary sector industry there are still preventative barriers hindering the expansion of trade. Whether it be physical, economic or political there are still many boundaries to the globalisation of trade