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International trade and Investments Essay (Critical Writing)

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Updated: Nov 5th, 2018

Introduction

The following discussion focuses on IMF’s & ECLAC’s effects on international trade and investments regarding the stages of economic development. These stages of economic growth are best analyzed using Rostow’s model that is characterized by five stages namely: traditional society, transitional stage, take off, drive to maturity, and high mass consumption. The stages of economic growth are affected by fiscal policy that is aimed at achieving macroeconomic stability, and possibly making some long term economic growth.

Discussion

International Monetary Fund (IMF) has some effects on international trade and investments regarding the stages of economic development in the sense that it supports fiscal deficits that are caused by monetary expansion in the increased government expenditure leading to balance-of –payment problems.

The IMF through its structural adjustment programme reduces the balance-of-payment problems by eliminating both the balance of payment (BOP) and fiscal deficits, thus making the economy to remain stable (Anupam & Krishna, 2002).

In addition, the IMF structural adjustment programme promotes economic growth and reduces unemployment levels. Moreover, the IMF provides financial assistance to governments, and this promotes international trade, investments, economic growth and development (Anupam & Krishna, 2002).

The study of the Economic Commission for Latin America and the Caribbean (ECLAC) effects on international trade and investments regarding the stages of economic development I are also important for this discussion. The ECLAC often takes important decisions and implements viable policies that greatly affect both the economic and social developments (ECLAC, 2002).

Through ECLAC’s efforts, significant international trade, investments and economic developments have been realized across the globe, transforming the traditional society stage of economic development to a more advanced manufacturing sector that is characterized by high mass consumption.

In fact, ECLAC’s policies make it possible to realize significant growth in both income and Gross Domestic Product (GDP) coupled with increase in international trade and investment portfolios. This sound macroeconomic management stabilizes exchange rate regimes and exchange rates (ECLAC, 2002).

ECLAC provides strong economic platforms and structures for investing in human and financial resources at both the local and international levels.

These well supported economic structures promote sustainable development. ECLAC in its position of leadership is capable of identifying emerging global trends in the economy that affect international trade and investments such as international economic and political issues (ECLAC, 2002).

For instance, ECLAC links one different trading region with one another using its International Trade and Integration Division (ITID). And, through this linkage programme, it provides the trading partners with important information on opportunities and some challenges that affect international trade and investment.

Importantly, ECLAC’s effects on international trade and investments regarding the stages of economic development can be seen in its effort to develop some joint strategies that aim at promoting trade and investments. In addition, ECLAC works together with other development partners on infrastructure, creativity and innovation. Finally, it provides sound policy frameworks on international dialogues and cooperation (ECLAC, 2002).

Conclusion

In summary, IMF’s & ECLAC’s effects on international trade and investments regarding the stages of economic development are geared towards economic stability by eliminating balance-of-payment deficits, and this can be best achieved through the application of sound fiscal macroeconomic policies.

The IMF has structural adjustment programme that makes it possible for governments to borrow funds for infrastructural developments and economic projects. On the other hand, ECLAC’s effects can be seen in its joint strategy formulation for promoting international trade and investments that encourage different stages of economic development.

References

Anupam, B. & Krishna, S. (2002). Foreign direct investment in Africa. Washington, D.C: International Monetary Fund.

ECLAC (2002). Globalization and Development, Report for bi-annual session period, of ECLAC Brazilia. Retrieved from www.eclac.org/publicaciones/xml/5/10035/summaryINGLES.pdf

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IvyPanda. 2018. "International trade and Investments." November 5, 2018. https://ivypanda.com/essays/international-trade-and-investments/.

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