National security depends on the nation’s ability to compete in a global market. Individual freedoms of consumers and manufacturers play a huge role in determining how competitive the country is. If individuals are forced to buy certain products (due to lack of choice) then there is not a free market and the competition of products is compromised–tipping the scales of power internationally. In western developed countries, we see that free trade is championed, but it is not truly practiced. Pure free trade means that the market is not hindered or tampered with by government or organizations that would have the power to do so, but many developed countries exercise protectionist practices to keep their nations healthy; but this is only because they can afford to do so. Free trade means giving the power to the consumer (not the government), who is able to act rationally and choose what to buy based on his or her values and budget. This creates a market that is most efficient and caters most to people’s needs and wants, creating a more satisfied community with a comfortable standard of living. Developing countries are advised to practice free trade because of its capability to lift a country out of poverty, but developed countries are not allowing a free market to do its job
In class we watched The Trade Trap-Ghana. One issue discussed was that imported maize was cheaper than domestically grown maize. This caused domestic poultry farms to buy the imported maize so that they could compete with the cheaper imported chickens! Production prices of the domestic maize and poultry were high because of lack of technology and infrastructure in Ghana. Another issue was that of bananas and pineapples. On one hand, the bananas did not meet standard length and weight requirements, while on the other hand pineapples had too much chemical residue as set by the European Union. These standards are technical barriers that cause free trade to crumble. Let the consumer decide what they are buying by giving them all the product’s information and the choice to buy or not to buy. If they want to support the Ghanaian farmers so that they can develop into a healthier country, let them! In the video report, James Wolfenson, the World Bank president, called developed countries “hypocritical” because they spend subsidies on their own agriculture while telling developing countries to enter the market…how can they do that when they cannot compete, which is the very essence of the free market? The mercantilist policies of European Union members to subsidize their own crops is out-balanced with their contribution to developmental aid to Ghana and other countries. This clearly eliminates free trade principles and keeps the international playing field in a structuralist system with developed nations as the wealthy getting wealthier and the developing nations as the poor who cannot dig themselves out.
In recent years, oil and gas have been highly valuable commodities. According to our text, Introduction to International Political Economy by David N. Balaam and Bradford Dillman, the authors recognize Algeria to be one of the globe’s “middle-to low-income oil exporters” and also consider Algeria a developing country (p. 352).
According to Reuters, Algerian “energy wealth means state finances are not under heavy pressure. This makes Algeria potentially very attractive to a wide range of foreign companies, if barriers to doing business can be removed.” These trade barriers must be avoided through the use of free trade, a policy strongly supported by economic liberals (Algeria currently is working toward more of an economic liberal approach to trade). In implementing free trade and relationships with other free trade states, the governments would not interfere or place regulations and standards on oil services and companies, which in turn, should help Algerian oil exporting businesses, thus it would help Algeria establish and maintain a higher gross domestic product.
Authors Balaam and Dillman cite international trade as an “engine to growth” and also believe that “becoming integrated into the global market economy” through trade would prove to be beneficial to developing countries and countries struggling economically (p. 275). When countries can trade with less barriers and restrictions, their freedom to trade is expanded and their national economic security is enhanced.
Nicaragua’s economic freedom score is 56.6, making its economy the 110th freest in the 2013 Index. However, its score is 1.3 points worse than last year, with declines in the control of government spending and labor freedom outweighing improvements in investment and fiscal freedom. Weakened infrastructure means that Nicaragua is plagued by a lack of property protection rights that stops any private sector from really emerging in the economy. Anti-free market policies continue, bolstered by economic and political populism that drives income redistribution and class warfare that are used to justify the large presence of the state in the economy, under the illegal presidency of Ortega. The inefficient regulatory structure hinders expansion and diversification of the products. The lack of access to long-term financing precludes dynamic growth in the market, and the investment lacks transparency that makes it difficult to regulate where the money goes, or that it even reaches the populations its trying to help. Nicaragua currently supports eight Free Trade Zones throughout the country and the majority of the factories within these zones are American or Taiwanese owned. Although these factories do employ thousands of workers who would otherwise be unemployed with no means to support their families, the wages are so low that this system simply perpetuates the cycle of poverty. Without giving them access to the global market, and ending our own autocratic tendencies at the expense of these developing nations, how can we expect any actual development to occur?
Cambodia is a country with a rough past, including civil conflict and little economic growth. It is growing now, though, but there are still issues to be fixed. One would be the issue of land ownership. Because of Khmer Rouge years, the Maoist movement that ran from 1975 to 1979, the land records in Cambodia were destroyed. Land ownership is now very ambiguous, and it is hard to prove that someone owns the land they are living on. Because of this, big companies such as Phnom Penh Sugar, a sugar company, has been able to have land afforded to them by the government and pushed the farmers that lived there already off their lands. This makes it difficult for the country’s small farmers to grow. To add to that, nearly all of Cambodia’s sugar goes to the EU, who have set the minimum price for imported sugar well above the rest of the world’s prices. This makes it even harder for the smaller companies to grow enough sugar for the world market. If the minimum price is high, that means that unless there is enough demand, it is less likely to be bought. Participating in free trade would free the smaller companies from this demand and help them grow, which in turn would help the country and fix the land issue, as the government is less likely take control over a large company’s land than a small farmer’s.
In our text, on page 274, there is a table for different strategies of development, and economic liberalism is featured. Notice that it is the only one that includes a suggestion of democracy. This is because economic liberalism puts the power in the hands of the consumer to decide what is best and encourage that sort of industry and service into the global market. The individual freedoms of democracy and free trade can help LDC’s (less-developed countries) develop into the country they can be. National security depends on its country’s constituents to drive its economy and this is only possible through free trade. In relation to developing countries, this means that the global powers of the world must not engage in mercantilist policies that block access to free trade for developing nations, as seen in our examples. Free trade is the best way for a country to transition from an LDC into a developed country.