International Trade/Global Finance

THE PARADOX OF INTERNATIONAL TRADE

As one well-known writer has aptly observed, the structure of the world in
which we live is very peculiar in that, while physically it is one single unit, yet,
because of the emergence of independent nations as a result of the assertion of political sovereignties, the uneven distribution of resources, both natural and human, over the earth’s surface, becomes not only discernible but highly patent.

With the resources of many countries not sufficiently large, with the resources of some not quite diversified to meet the demands of their rapidly growing populations, and while others posses industries which could produce many commodities in excess of the domestic consumption requirements of the people, a situation arises which makes necessary economic interdependence of nations upon one another.

Thus, through international trade, it is possible for relatively small areas to support their large populations, as in the classical example of Japan.

However, despite the manifold advantages brought by international trade, one cannot afford to ignore certain disadvantages in the form of international complications, such as:

Bitter Struggle for Markets and Raw Materials.
It should be realized that
industrialization, which has greatly increased production and quickened the tempo of commercial activity, has been responsible for a bitter struggle for world markets.

As a matter of fact, throughout the 19th century the competition of the leading industrial nations for the principal markets of the world was very intense and severe.

Those industrial nations sought colonies not only as markets for their manufactured goods but also as sources of raw materials for their factories.

Thus, nations have clashed in bloody conflicts due to the desire of the strong and aggressive ones to establish political control over countries necessary as outlets for their manufactured products, just as they endeavored to establish control over the sources of the world’s essential raw materials and foodstuffs.

These evil wars left a few lessons for us to ponder, one of which is the recognition that trade should be used as a civilizing influence and not as a cause of wars if high standards of living and progress are to attained.

Desire for Economic Self-Sufficiency.
In recent years, many nations have
displayed a strong desire to become self-sufficient in principal products and
commodities; this desire compelled them to embark on programs designed to foster economic nationalism.

A nation committed to such a program will build her economic life providing within her own borders all the commodities vital to her existence and
prosperity.

At the same time, such a nation is determined to free herself from the tentacles of dependence on other nations for finished articles.

Although this objective is difficult, if not impossible to attain, quite a number of nations have not given up the hope that eventually they will succeed in this direction.

One of the visible and palpable results of a program of economic nationalism
has been the erection of tariff walls designed to restrict the entry of goods and products from foreign countries.

Beyond doubt, these tariff walls have merely served as instruments for generating an atmosphere of suspicion, ill-feeling, and mistrust if not hatred among nations.

All told, such strained international relations were generally causal factors in the wars of the past.

It is pertinent to point out, in this connection, that the economic interdependence of nations is a living reality which cannot be ignored.

Its existence cannot be denied, for its denial can only undoubtedly result in bitter antagonisms and
bloody conflicts.

Economic Interdependence.
If one of the aims of government is a high standards of living for its people, as everybody wont to agree, then specialization, in accordance with the resources of nations is not only necessary but indispensable.

Industrial nations must devote a major part of their economic efforts to the production of commodities intended to meet the requirements of peoples in other countries.

In turn, these very nations depend on many products beyond their borders for the satisfaction of some of their most and pressing wants.

Thus, economic interdependence of nations upon one another can be possible only if trade and exchange remain unhampered.

However, when world-wide dislocations take place, countries dependent upon
one another for the satisfaction of their needs are placed in untold economic
difficulties.

Such circumstances may be brought about by wards and embargoes.

To illustrate this particular point, one doubtlessly remembers that, when World War II broke out, England, one of the countries particularly dependent upon international trade, suffered greatly when its food supply was threatened of being cut off by the activities of German submarines in the waters surrounding her.
Likewise, it will be remembered that when the Philippines was cut off from the rest of the world on account of the Pacific War, untold difficulties characterized the life of the Filipino people.

However, notwithstanding certain shortcomings which characterize
international trade, a few of which have been indicated and discussed in the foregoing pages, it cannot be denied that the mere suspension of international trade, even for brief periods, can adversely affect the lives of the many people of the world.