Impact of International Trade on Emerging Economies

Impact of International Trade on Emerging Economies
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The advent of globalization has increased international trade, as emerging economies have removed some barriers to trade while working more closely within the international global trade framework. The emerging economies increasingly have better access to capital, and transnational corporations that have expanded into these markets. Additionally, there are comparative advantages of emerging economies that have low costs, and have attracted Foreign Direct Investments (FDI) (Hanson, 2012). The Western economies may no longer be the safe markets, even as investors pile up debt instruments and bonds of these countries. As emerging economies are involved in international trade, they are likely to experience longer growth rates since they are in the early phase of development.
The involvement of emerging economies, especially India and China in international trade has resulted in economic expansion and reduction in poverty. China has become competitive in mass production of goods, that even Western companies have shifted their base in the South East region. The population in the emerging economies is young compared to Western economies, and the abundance of labor makes the countries well suited for production and manufacturing. There are opportunities in international trade for countries that export goods, and the GDP per capita has risen over time, as the countries have been integrated in the global economy (Hanson, 2012). This is especially because there have been opportunities to expand into new markets, increased exports and increased investments.
In the years 2003-2011, the purchasing power of the emerging countries improved at a fast pace more than ever before, transforming the economies of these countries and their economic power (The Economist, 2013). Even the transformation has lifted millions people out of poverty, there are still concerns that the level of inequalities makes it difficult to sustain economic growth. The emerging economies are also vulnerable to economic shocks and slowdowns, as they are increasingly export oriented and need to be diversified. The growth in demand of merchandise goods has benefited the Chinese economy, which has been reliant on exports to expand the economy (The economist, 2013).
Expansion of international trade has been associated with the greater involvement of emerging countries and reliance on global supply chain and communication technology. The low labor and production costs have allowed the emerging countries to rely on a complex global supply chain to spread operations regionally and globally. In the case of Eastern Europe economies, the countries have liberalized their economies and traded more with Western Europe, unlike before where the centrally planned economies mainly traded with the Soviet Union. In any case, growth in Western countries has been low and almost stagnant, while the emerging economies have attracted foreign investors.
Even as the emerging economies have grown tremendously in the last two decades, the cost of production will likely change and the service sector will play a more prominent role. The 2008/2009 global financial crisis affected the emerging economies...