Your trade show displays are a major determining factor as to whether you will have a successful trade show exhibit or not. You need to use high quality displays that will attract visitors to your exhibit. You want to make sure that your trade show display not only attracts visitors it should make them want to know more about your product and services. You want your trade show display to be neat and it has to be visible so visitors will know what message you are trying to get across. You can use a display board to put some of your products on. Make sure the display is at eye level to draw them in. The display board should be nicely organized and not too cluttered. You should also make sure all your prices are clearly marked. Your customers will want your items if they think they are in high demand. You can put a sold sign on one or two items. This will make visitors to the trade show think that they better purchase your product now because it might not be available later. You can use interactive trade show displays to attract a crowd to your exhibit. You can use surveys, computer games, drawings or demonstrations. You don’t have to have an elaborate presentation or demonstration, just something that will peak the visitors interest. Giveaways and promotional items are also a good way to attract visitors. It is also a good way for the visitor to remember you after they have left the show. Make sure the promotional items are something people will use or look at often, such as magnets, key rings and pens. It’s better to place your promotional item in a place where they have to walk into or through your exhibit to get one. You can use a drawing or contest to attract visitors and it is also a way to collect contact information. The contact information can be used after the show to contact potential customers. You can have a drawing for a promotional item or you can use one of your products as a prize. You want to make it easy for your visitors to get information about prices, minimum orders or other basic information. You can provide this information by using signs and graphic displays that are easy to read. This way a visitor already knows exactly what you have to offer without having to ask. One very important thing to make sure you have is plenty of marketing materials. You will want color flyers and brochures. You will also want to have plenty of business cards and order forms available. That way visitors will have information about your product and services they can refer to at a later date. You want your trade show exhibit to look professional and organized. You should make sure you have table top covers to give the space a unified look. You can use table top or floor displays to get your message across. You can use literature racks so your marketing materials are easy to get to. All of the things above will help you to have a successful trade show exhibit.
Current technology has come up with trade show pop up equipment that surpasses all its predecessors for sheer lightness and economy of design. Although lightweight they boast of durable materials and lasting construction. They are collapsible to some extent, some models more so than others. The frames used in these displays can be bundled in a way similar to the mechanism of the umbrella. After that they may be safely deposited into their custom containers Pop up display tables have assumed new functions. These may be fitted with shelves to place papers and other paraphernalia needed when transacting with visitors. They may, on the other hand be hollow within. In such a case they serve as the main containers of the items included in the trade show pop up. Bringing the display from one place to another becomes child’s play and the container fits comfortably inside a car. The technique used in constructing trade show pop ups makes it possible to assemble them without having to use heavy duty tools, as was usual in the past. Assembly time can be in as little as a few minutes. Because they are capable of being conveniently carried around and quickly assembled without the use of complicated tools they are ideal for ladies. The simplicity of their structure notwithstanding, trade show pop ups can be fitted with an impressive range of features, such as shelves, lamps and even LCD screens. With the correct type of customization they be made to look just as impressive as full-fledged display furniture Animated displays and shelves are not the only ways to enhance the functionality and beauty of trade show booths. Logos may be custom printed on cloth and used as the panel of metal frames or as décor in front of the desk and on the backdrop. Not one but three and maybe even more animated displays can be incorporated in the pop up Trade show pop ups are particularly suited for small businesses or outfits that deal in non-physical commodities and commodities, like real estate that cannot be transported. Examples of non-physical products are prepaid cards and postpaid subscriptions and insurance. They are ideal for new-product promotions or for holding press conferences about products soon to be found in the market. If it is the trader’s purpose to sell physical commodities in these pop ups he will have to place the products in a bag, place the bag in the rear of the display and have someone to watch over it. Most trade show pop ups are rented from companies that produce them. Today, a trend for buying pop ups has been started by the entry into the market of lightweight displays. These displays are comparatively lightweight and can be brought along easily from one trade show to the next. Purchasing them instead of continuously renting makes it possible for the user to save a lot from the money he pays every time he needs to rent one. Since the most economical models can be carried as easily as carrying a suitcase, it is no longer a hassle for any salesman to bring them anywhere he intends to display them.
Forex trading involves a lot of complex activities and using software to help analyze data movements can enhance trading profits and bring better trading results. At anytime, in a day, currencies can fluctuate and when such fluctuations happen, it is a signal for the trader to take advantage of a profiting opportunity. Forex charting software is a tool that can predict currency fluctuations, which can be further analyzed to forecast how market prices will rise or fall.
Forex charting software creates charts that show the course of a currency rise and fall, in a given duration. The charts can be used to determine the momentum of forex trade and this can help traders to determine which currency investment is best, when to buy and sell so that they gain the profit they seek through such software. This software has certain indicators that can be used by trader to make their trading moves. It provides trade frames that can be used by the trader to carry out research into trading.
There are many charting software packages available in the market, but to select an efficient one, it is vital to check rating, read reviews and look at forum discussions on it so that you get one that is consistent in its functioning.
The chief advantage in using this software is that it enables you to take informed and weighted decisions, based on various analyses. The software makes use of high, low, open and close points over a period of time, and combines them to analyses prices, which can be used by the trader to make he right decisions. It checks into past and present currency rice fluctuations and predicts future trends, which can give a trader an edge in trading. It gives analysis across various accounts using different types of charting tools and provides alerts when it arises. The real-time data that is provided for chart extrapolations and analysis can be exported to an excel sheet for a detailed analysis before making an informed decision.
Free trade agreements are typically established between countries that share various demographics in common – most notably proximity. Countries that enter into treaties with neighboring countries demonstrate their willingness to remove tariffs on goods that cross borders, and in turn the respective governments attempt to reconcile political and other differences through cooperative trade. When countries firmly established in one FTA work toward expanding the agreement to include other nations, the opportunity for improvement in economy increases.
The European Free Trade Association (EFTA), founded in 1960, consists of four small countries that nonetheless have proven important in various trade sectors, in particular banking and finance. Their association with the Southern African Customs Union (SACU) in a treaty finalized in 2008 signifies an agreement designed to benefit both regions as customs are eliminated on imports to Europe and Africa. SACU countries receive ample supplies of medicine and machinery to aid improvement in their industrial sectors, while the EFTA nations may import needed precious metals and natural resources more commonly found in Africa.
The EFTA is comprised of:
Iceland – Iceland’s small economy does exceed that of some SACU nations. Their somewhat isolated location in Northern Europe makes trade practically a necessity, and for their part Iceland exports fish and byproducts and select minerals.
Liechtenstein – Liechtenstein’s prosperous economy may stem from low taxes and ease of incorporation. The nation’s primary exports include machinery, audio and video components, and electronics.
Norway – Foreigners may associate Norway mainly with the fishing industry. While fish is a prime export, the country also trades out petroleum and machinery.
Switzerland – The world is familiar with Swiss chocolate and precision Swiss watches and clocks, but this only scratches the surface of their main exports, which also include pharmaceuticals and electronics.
SACU is comprised of:
Botswana – Botswana has enjoyed progressive economic growth in the last three decades, well before the EFTA-SACU agreement. Precious gems and metals – diamonds, coppers, and nickel – represent the bulk of the country’s exports.
Lesotho – Since finalization of the joint agreement, about one fifth of all the country’s exports – textiles and diamonds – are sent to EFTA nations while the rest are exported to SACU partners and the United States.
Namibia – Namibia is a nation rich in precious gems and metals, including diamonds, copper, gold and zinc. Despite these major exports, mining represents a very small fraction of overall employment.
South Africa – Perhaps the largest economy among SACU nations, South Africa is the world’s largest producer of platinum and gold.
Swaziland – Mining plays an important role in this nation’s economy, though resources have depleted over time. Swaziland relies mainly on wood and sugar to export.
Since coming to an agreement in 2008, the nations of EFTA and SACU have noted an increase in value of their respective trade merchandise. In 2010, nearly $3 billion worth of goods traded between member nations, and future endeavors hope for steady growth. Recent meetings between EFTA and outside nations, including India and Indonesia, may also bode well for SACU nations if there is an opportunity to expand on trade through their association with Europe.
Developing countries and trade:
International trade is an important source of foreign income in almost all developing economies, these countries are referred to as developing due to their low GDP level and they are faced with high levels of poverty and unemployment, according to David Ricardo and Adam smith international trade plays a crucial role in the development of an economy, the Mercantile theory of development states that trade led to the wealth of nation.
This paper discus the various problems that the developing countries face in international trade and their effect on the agricultural, industrial and service sectors. Some of these problems are external while others are internal problem. Some external problems include competition in the global market, tariffs and other trade barriers, required quality standards. Some internal problems include high cost of production, tariffs of inputs and
Problems faced by developing countries:
There are various problems that developing countries face in international trade which will be discussed; this paper also provides possible solutions to these problems of trade. Some of the problems include trade barriers, unfavorable terms of trade, high quality standards,
A large portion of GDP in developing countries depend on agriculture, agriculture helps in providing food to the population, providing employment and surplus is exported to other countries. Foreign income highly depends on agricultural products exported and also tourism, however agriculture plays an important role in these countries in providing employment and food, there are various problems that these developing countries face in this sector and they include:
High tariffs are imposed on imports in international trade; tariffs are a source of revenue to the government but at the same time they restrict the level of imports in a country, the agricultural sector in developing countries are faced with this problem because their good become more expensive in the internal market due to imposed tariffs.
The tariffs will reduce the amount demanded due to the increase in price, therefore the agricultural sector is faced with the problem of declined demand for their products, and for this reason therefore the surplus amounts produced is not exported.
Bans and quotas are also trade barriers that cause problems in internal trade, in the case of quota the developing countries are only required to export a certain quantity to country, this is a major draw back to the agricultural sector in the developing countries.
High input costs:
Most developing countries import inputs such as fertilizer, pesticides and oil, their cost in the internal market are usually high and some producers cannot afford these costs, for this reason therefore the cost of producing the agricultural products is usually very high making the final price for these products to be high.
Therefore the high cost of inputs will lead to an increase in the cost of production, the final price of the agricultural products is usually very high and therefore less competitive in the internal market, for this reason therefore the agricultural products are usually less demanded in the internal market due to competition from more efficient producers.
Oil is also a major input in production in each and every sector in an economy, the developing countries in most cases will import oil from developed countries where prices fluctuate frequently, and the cost of oil will lead to an increase in the cost of production of these products leading to less competitive prices in the internal market.
Many countries subsidize their agricultural sector in order for them to produce more, this has posed a major problem to the developing countries that cannot afford to subsidize its agricultural sector, subsidizing of agricultural production in developed countries result into a reduction in the cost of production and therefore the country demand less imports.
Subsidies therefore will create problems to the agricultural sector in the developing countries; this is because the developing countries produce more at low prices that are more competitive in this market.
Technology and mechanization:
Developing countries import technology and machinery from the developed countries, these machines help in increasing production and also bringing down the cost of production, however due to the high cost of these machines the developed countries prefer to use labor intensive methods of production due to high initial cost and also maintenance costs.
The lack to use modern machines and technology in production lead to low levels of exports and also high costs of production, for this reason therefore the developed countries remain with the problem of underproduction and also low exports.
The lack of machines that help in turning the raw materials from the agricultural sectors into finished products lead to increased disadvantages to the developing countries, most developing countries export raw materials whose prices in the international market is low, developing countries should therefore start exporting finished products from the agricultural sector rather than export raw material.
Some developing countries use genetically modified plants for production, these products are more productive where the time taken to grow and also the production levels. This is a challenge to the developing countries to adopt modern technology to increase production and also reduce costs of production.
Lack of product diversity:
Developing countries export approximately the same product to the internal market, this leads to increased competition and the developed countries have power over them on deciding from which country to import from, and further the developed countries will set prices due to high competition in the global market.
Product diversification means that the developing countries should not produce the same goods for exports; they should try and diversify the products they exports in order to reduce competition and therefore increase the foreign income received. This should involve the introduction of new products to be produced in the agricultural sector that are to meet the demand for consumers abroad.
Unfavorable terms of trade:
Terms of trade will also be a major problem to the agricultural sector, developing countries exports are mostly agricultural products and they will import machinery and oil from developed countries, this poses a major problem in the terms of trade and this finally results to trade balances because the imports have more value than the exports they produce.
Lack of proper bargaining power by the developing countries lead to them experience a problem in setting prices, the developed countries will give their decisions on the price they are willing to pay for the products and because the supply in the global market for these products is high the developing countries have little control over the export prices and the problem of terms of trade arises making imports expensive than the exports.
Debts and balance of trade:
Due to the problem of balance of trade and terms of trade the developing countries are faced with the problem of debts, developing countries face balances in trade adding to the problem of high debt levels to finance debts, for this reason therefore the developing countries may restrict imports in order to reduce the level of debts and therefore less inputs to the industries and agricultural sectors, for this reason therefore the country will not be in a position to increase production to offset the debts earlier incurred.
Quality and standards:
Developed countries and developing countries tradfe partners set high standards for products exported, this lead to frequent ban on products produced in developing countries, A good example is the ban on fish imported from east Africa during Idian Amin reign, the reason was because the dictator had all the disabled people thrown into lake Victoria and therefore it was unhealthy to import fish from the lake.
From the above example it is clear that developing countries will ban imports due to various reasons, in the example it was evident that most fish exported from east Africa was tilapia, tilapia fish is a glazer and fed on sea weed and not meat, however due to the act of the dictator fish imports were banned for health reasons.
Other products have also been faced with the same problem, example beef from developing countries where a certain disease outbreak may result into a total ban in the exports of these products even after health checks on the slaughtered animals. This is a major draw back to the agricultural sector.
Processing and transportation:
Most of the agricultural products require that they are processed before being consumed, most of these products are perishable and require to enter the market within the shortest time possible, this requires that the developed country to device ways by which this is possible but due to security reasons some products get stale before they enter the market. For this reason therefore there is a need to process these products before they are transported.
The other problem is that some products require refrigeration example flowers, vegetables and fish and due to lack of capital to purchase and maintain these machines, for this reason therefore the products are not of quality on entering the market. Poor transport and communication network in developing countries also hinders the movement of good, for this reason the surplus products produced in developed countries does not find its way into the market resulting into less products being exported, for this reason therefore the developing country government has a role to play in ensuring supportive infrastructure exist which will aid in transportation of goods to the market.
Bureaucracy in international trade:
Most developing countries are faced with the problem of bureaucratic policies formed by developed countries, a country may export a certain product to a developing country but it is required to import a certain product from the developing country, these are bureaucracies that lead to trade diversion where developing countries may be forced to import good from a high cost country because it exports the products to that country.
These bureaucratic policies harm the developing country agriculture sector whereby they are required to import a product from a country where it exports to its product failure to which they are denied access to the market. These bureaucratic organization also set the prices they buy the imports from the developing countries, this is amjaor draw back to the agricultural sector in the developing country because developed countries will set prices for the goods imported from these countries and also set the prices for the inputs into the agricultural sector.
Industrial sector and services:
The industrial sector in developing countries is still in its initial stages of development, developing countries will protect these industries though tariffs and quotas to protect infant industries, the countries will also try to help these industries by subsidizing the products in order for them to gain competitive advantages in the internal market, there are some problems that this sector face in international trade and they include:
High cost of inputs:
The industrial sector will demand inputs from foreign countries and in most cases the cost of these inputs will be very high which will make the cost of final products to be high, the industrial sector products therefore will have a higher price in the global market reducing their competitiveness in other countries, this is a disadvantage to the industrial sector.
Some of these inputs include oil and oil products that lead to an increase in the cost of production if their prices are increased by oil exporting countries; the cost of production caused by high input prices is therefore a major disadvantage toward the development of the industrial sector in developing countries. However there is need for the industrial sector to adopt other alternatives as sources of energy and also substitute imported inputs with locally produced products.
Developing countries fail to make a break through in science and technology, they do not undertake sufficient research for technological progress, for this reason their products do not meet the quality of the products in the international products, developing countries are highly advanced in technology and will produce high quality products that are very competitive in the market, for this reason therefore the products produced in the industrial sector does not meet the standard set by internal traders.
Therefore it is evident that developing countries face challenges in the production of goods where they are required to produce high quality goods but they are unable to met these standards due to the lack of technology and machinery that aid in improving the quality of the good they produce.
Quotas and tariffs:
Developing countries will have infant industries that they protect by means of tariffs and quotas; however trade partners will be against this move and will result into an imposition on more tariffs on goods imported from such a country, this therefore leads to problems in the international market.
Tariffs and quotas imposed on the imports by developing countries also pose a major problem to the industries, this is because the cost of production rises far beyond the equilibrium global market prices, the developing countries impose these tariffs to earn revenue from imports but at the same time the industries face problems.
Tariffs imposed on their exported products is also a major disadvantage to the developing countries, their products become very expensive in the international market due to these tariffs leading to reduced demand for these products, this is a problem that can only be resolved through formation of trading blocks.
These developing countries aim at producing good for exports but they are faced with stiff competition from other countries producing the same good, high competition leads to a reduction in the global market prices posing a threat to the industrial sectors in developing countries, high competition in the global market therefore leads to reduced earnings from exports by developing countries.
High competition also occurs as a result of trading partners producing the same goods they import from the developing countries, these products are substitutes to the products imported and in order to reduce the level of imports they subsidize the production and at the same time impose tariffs on imports and therefore the developing countries loose the international markets they earlier acquired.
Lack of product diversity:
The industrial sector is also faced with the problem of the lack of diversity in the industrial products they export. This lead to increased competition which would have not been present if the countries produced many different goods for exports, for this reason therefore there is a need to diversify on the products produced by the industrial sector.
Most developing countries will have industries that do not completely convert raw materials into finished products, this leads to the disadvantage that the industry receive less for exports than when it would have converted the products to their final stage, this happens however due to lack of machines and capital to undertake processing, therefore it is important that the industrial sector produces fully processed products for exports.
Bureaucracies in internal trade also affect the industrial sector where developed countries set conditions regarding trade, they require developed countries that export products in their country to import their products, for example a country that exports coffee to a developed country is required to import inputs such as fertilizers and pesticiedes from the same country leading to problems in the industrial sector.
Bureaucracies also distort the free market in international trade by setting the prices for products from developing countries, therefore they determine both the input prices and the export prices in developing countries, this is major problem in the development of the industrial sector in developing countries and this is what is referred to as neocolonialism.
Loans and grants from developing countries also lead to problems in international markets, developing countries may be offered a grant or a loan but with strings attached or conditions attached, they may require the developing country to purchase certain products from them or even other conditions that may hinder efficient exchange of goods in the international market, the developed country do this for their own benefits and the developing remain poor due to these problems faced in trade.
Trade involves trade in both goods and services, services include the trade in services provided by countries to other countries, these services in trade can for example be viewed as outsourcing services, most companies in developed countries outsource in developing countries due to low wage rates demanded, for this reason therefore there is an exchange of services for income.
This sector has developed as a result of improved communication network all over the world allowing people to get employed by companies abroad, however the lack of proper communication networks in developing countries creates a major problem to this sector and there is less income sourced through these methods.
Therefore one of the problems is lack of support infrastructure such as communication networks and also electricity supply in remote regions of developing countries. this hinders the development of this sector resulting to reduced income from this sector.
The other problem is the high income taxes imposed on this type of sourcing, most countries will demand revenue from firms in this sector which makes it difficult for the sector to develop, as a result this sector remains underdeveloped to its full potential due to high tax imposed on income.
Despite the high foreign income potential in this sector the developing countries have not focused on its development, according to the various trade theories the free movemtn of goods and services between countries will result to equalization of factor incomes, however this is not the case and the developing countries still remain low income countries where labor is cheap and capital is far much expensive.
There are inputs for this sector such as computers and other machines that are imported from developing countries, they are very expensive and developing countries will impose taxes on these products making them very expensive, the high cost of inputs results into high cost of production and therefore they are less competitive in the global market.
Bureaucratic organizations also affect nthe service sector in developing countries, certain conditions put in place by developed countries hinder the proper running of the service sector, conditions are put in place by these bureaucracies that affect the service sector where the developing country must adhere to in order to participate.
The industrial sector and agricultural sector should adopt modern technology to help increase production and also increase efficiency, when this is done the sectors will experience scale economies and also a reduction in the costs of production, technology should be adopted in the agricultural sector where machines should be introduced to perform various tasks increasing efficiency, the other option is to introduce genetically modified plants and seeds that are more productive, when this occurs the final product prices will be very competitive in the global market.
The other possible solution is through formation of trading blocks with trading partners, this will lead to opening up of trade and formation of free trade areas, and this will lead to increased specialization among countries that will aid in formation of free trade areas, specialization will result into reduced global market prices of products resulting into improved standards of living among countries.
Reduced tariffs on industrial inputs will also result into an added advantage into the industrial and agricultural sector, this will make the inputs more affordable and therefore the cost of production will be reduced significantly resulting into more competitive prices in the international markets.
From the above discussion it is clear that both the agricultural and industrial sector face major problems in international trade, some of the highlighted problems in this paper include trade barriers, lack of product diversity, quality and standards, high costs of inputs, terms of trade, lack of technological advancement and competition from other countries.
The service sector also faces various problems in trade, outsourcing involves providing services to oversea companies which in turn pay for the services provided, however lack of support infrastructure results into reduced income levels in this sector which remains less developed yet the high potential for foreign income
These problems can however be resolved through formation of trading blocks that will help achieve free trade among countries; this will ensure that goods and services exported are competitive in the market. Other solutions include subsidizing and protection of infant industries which will help products to b e more competitive in the international market.
Other challenges faced by these developing countries include the bureaucratic policies put in place by developed countries, developing countries are required to follow conditions put in place by these copuhntries for it to continue trading with the developed countries, this is a major problem that should be eliminated to allow proper runni9ng of a free market in international trade, however this requires the developed countries to seize giving conditions to the developing countries to enable them to develop.
Developing countries governments should also come up with policy measure that help in providing support infrastructure such as road networks and also communication networks, this will help improve internal problems faced by these sectors. Further improvements in policies should be aimed at reducing costs of inputs through zero tariffs on industrial and agricultural inputs imported.
In months I have been writing this article I accumulated more debts than I can actually repay. This paper would be incomplete without thanking the following institutions and people, who have made my PhD studies a reality; first and foremost I would like to thank Chinese Scholarship Council (CSC) and Government Republic of Zambia for sponsoring my course, Bank of Zambia (BoZ), my employers, for giving me a paid study leave to come and pursue my studies here in China, and University of Xiamen for accepting me, Professor Biwu Zhang, for his tutorship and guidance and spending his time to review this script, whom I personally owe a lot, my supervisor, Prof. Huang Meibo for being firm on me, but kind. To my wife and children, I say many thanks for being patient and understanding. And lastly, all my lecturers, friends, WISE Institute and Economics Department staff whom I may not have a space to mention here individually. However, all the shortcomings of this Paper are entirely mine, and no person mentioned herein bears any responsibility for them.
Global peace is an ideal form of freedom, peace, harmonious atmosphere, and happiness among and within all nations and/or peoples. To other scholars, world peace is a utopian idea of planetary non-violence by which nations willingly cooperate, either voluntarily or by virtue of a system of governance which prevents warfare.
Some new theories and issues concerning promotion of global peace are going on in the world today. Rather than world trade being dependent on world peace, as in the past, world peace and harmony may be influenced and brought nearer to reality through burgeoning world trade unlike in the past theories where trade was a function of global peace. In this paper we argue that peace is the function of trade, that is to say that trade brings about peace. Hence being the beacon, of peace. Recent studies have developed this theme in the modern days. Here we condense and analyze various studies on this issue, into this article. It is common knowledge that global commerce thrives well during peacetime but here we argue that global peace thrives better during enhanced global trade. We should also understand the important role that trade and international marketing play in actually producing and procuring peace as a catalyst. International trade brings individuals and various entities together through the motivation of doing business interaction. And, all this interaction yields not just the mutual gain associated with business relationships – it also creates personal relationships and mutual understanding. These are the foundations of global peace and prosperity. In the modern times most theorists believe that “peace is the natural effect of trade,” however, a number of economists and political scientists firmly espouse the
notion that trade among nations leads to peace. If political conflict leads to a diminution of trade, then at least a portion of the costs of conflict can be measured by a nation’s lost gains from trade. The greater two nations’ gain from trade the more costly is bilateral (dyadic) conflict. This notion forms the basis of most theorists’ assertion regarding dyadic dispute and trade as espoused by liberal international theory.
This paper develops an analytical framework showing that higher gains from trade between two trading partners (dyads) lower the level of conflict between them. Cross sectional evidence using various data on political interactions confirms that trading nations cooperate more and fight less because they have everything to lose. And this confirms the notion that trade is indeed a beacon, of peace.
Keywords: International trade, beacon,
Global peace is an ideal form of freedom, peace, harmonious atmosphere, and happiness, among and within all nations and/or peoples (Barbieri, K. and G. Schneider 1999). To other scholars, world peace is a utopian idea of planetary non-violence by which nations willingly cooperate, either voluntarily or by virtue of a system of governance which prevents warfare. Although the term is sometimes used to refer to acessation of all hostility among all individuals, world peace more commonly refers to a permanent end to global and regional wars with future conflicts resolved through nonviolent means (Gasiorowski, M.and S. Polachek 1982).
While world peace is theoretically possible, some like the pessimists school believe that human nature inherently prevents it, as human nature is evil. This belief stems from the
idea that humans are naturally violent and evil, or those rational agents will choose to commit violent acts in certain circumstances. Others however believe that war is not an innate part of human nature, and that this myth in fact prevents people from reaching out for world peace.
If world peace is defined as the absence of hostility, violence and conflict, not just between countries and regions, but between individuals, world peace would imply a worldwide end to violence and to institutions which rely on threats of violence to sustain their existence. It follows that there could be no law enforcement, because force is a form of violence. Without law enforcement, there could be no laws, except those which everyone voluntarily agrees to follow. Finally, there could be no governments of the type that rely on threats of violence to collect taxes, maintain their borders, or govern their citizens. And this assumption consequently leads us to a utopian belief, which fails to hold in real life.
1.1 Globalization, Trade and Conflicts
Having conceptualized in general what global peace entails. The fundamental question to ask here, is that is global peace a reality, if so under which mechanisms can this be achieved? Some see a trend in national politics by which city-states and nation have unified in pursuance of trade, and suggest that the international arena will eventually follow suit. Many countries such as China, Italy, the United States, Germany and Britain have unified into single nation-states, with others like the European Union following suit, suggesting that further globazation will bring about a unified World Order. The resulting factor will be higher trade volumes and reduced conflicts. The force behind this rapid globalization is no other than trade, which is used as a medium and beacon of piece, as trade is actively bringing all people of different boundaries together. Subsequently every people have no choice but to live in harmony if they have to pursue further trade. There are more costs to conflicts than gains you obtain through trade.
The paper is organized as follows; in this section we have given a detailed introduction of the topic. In the next section we will talk about trade and divergence in its perspectives in section 2.0; this is followed by a discussion on economics model of the “Peace-Through-Trade”, Liberal hypothesis in section 3.0, and in section 4.0 we briefly illustrate the game-theory: signaling models, followed by observations from the trade-conflict model regarding the democratic peace and lastly the conclusion is given in section 6.0
2.0 Trade and divergence
Following a detailed introduction of the topic above, we will try to put trade and
conflicts into the right perspectives now.
It is been observed that Cuba has had a confrontational relations with USA and more cooperation relations with Russia for a long time now, and in the 1990s Cuba had seen a lot of dramatic trade cooperation from Canada which has strong relations with USA, because of this intertwinement of Cuba-Canada-USA relationship, USA and Cuba may eventually end up being allies in future. In this regard, studies have revealed that economic and political relations are intrinsically intertwined. In this section, we argue that the “trade and conflict” literature is motivated by this observation of this nature in reality. Any given country can be both cooperating with some countries and in a state of conflict with another set of nations at the same time. Furthermore, economic and political relations go hand-in-hand.
Aside from the countries mentioned above, there are countless other examples in this world (Neil R. Richardson, 2004). The question we want to address is why a particular country, like the United States has good relations with Canada yet poor relations with a country like Cuba; and why at the same time does a country like Cuba can have good relations with Canada, yet poor relations with the United States. Clearly looking at the uniqueness of only one country in isolation, rather than both the countries comprising the bilateral relationship (i.e., the dyad) would not provide a full answer. Nor would universal variables, i.e., variables common to the entire international political system provide an answer, since they would not be able to explain how cooperation and hostility coexist simultaneously between two members of the system. For this reason, at a minimum, it makes sense to concentrate on dyads rather than countries as the component of observation. In fact, this is precisely the approach of the conflict-trade literature, though now some have begun to extend the theory to incorporate many-sided situations. In essence what this trend among Cuba, USA and Canada is trying to show us in its general perspectives is that trade can be unifying factor among various countries. This is because if there was a conflict between Cuba and USA for instance, USA may fail to attack Cuba as Canada may act as a mediatory country between the two because of its trade relations it enjoys with Cuba and USA.
2.1 Defining Peace: A Trade Theory Perspective
In the context of dyadic relations, Solomon W. Polachek (2006) defines conflict as trade gone skewed. He argues that it is well known fact that nations (or for that matter other economic entities such as households) can raise their well-being through trade (if there is a difference in the relative prices each faces prior to trade). It results from gains due to specialization in production, which leads to higher levels of income and therefore greater consumption opportunities and from the prospect to exchange at the lower prices, even if the level of
production remains unchanged from its pre-trade level.
Empirical evidence indicates that gains from trade can be substantial. For example, Acemoglu et al. (2003) demonstrate that access to the Atlantic is responsible for the rise of (Western) Europe between 1500 and 1850, and this is especially true for nations engaged in long distance oceanic trade. But what happens when a particular economic entity’s gains from trade are not as high as it thinks it should receive? Often in such a circumstance the entity uses force to achieve redistribution through various means of coercion. Liberalists have argued that using force to coerce is also a form of conflict. Since force can be viewed as a type of trade, (“I’ll be violent if you don’t give me what I want”), conflict is a form, as well as symptom, of “trade gone awry” (Acemoglu et al. 2003) As such, and he argues that conflict occurs when parties fight over economic rents. When conflict lasts over a long period, it is known as protracted conflict. From a normative perspective, the control and eradication of conflict is an area of interest in the field of defense economics and peace science (Acemoglu et al. 2003). Economists and Liberal Theorists in this area study ways to achieve peace through eradication of conflict, while also exploring the more positive aspect of assessing its impact on society. But to control and eradicate conflict, one must know how and why inadequate trade gains come about. Therefore, with this observation of studying ways to achieve peace through eradication of conflicts leads us to the issue of obligation for peace.
2.2 Responsibility for Peace: A Lifelong Peace – Notions of a Stable Balance
International Relations studies, particularly liberalists have observed that eradicating
hostility and promoting cooperation is a significant step leading to peace. One method of thinning hostility and bringing about cooperation is by legalistic dictum often initiated by third parties. One of the most profound and diplomatic mediums of this is through trade. However, the problem is that attempts at peace imposed by others may be innately unstable, especially when the underlying differences originally separating the countries remain. For this reason, it seems reasonable that a viable peace is a natural peace based on mutual dependence and therefore trade enhances and facilitates this linkage. In his criticism of the Treaty of Versailles, Keynes (1920) argued that Germany be allowed to have economic relations with the rest of Europe or the prospects for peace would be dim. For example in The Economic Consequences of the Peace he writes “If we oppose in detail every means by which Germany or Russia can recover their material well-being, …we must be prepared to face the consequences of such feelings (Keynes 1920).” Solomon W. Polachek (2006) similarly argues that only through mutual dependence can equilibrium come about where peace remains solid and secure, so that neither party is motivated to change the status quo.
Therefore we can note that mutual dependence makes conflict more costly, and as such, it
increases incentives for cooperation. Probably many types of mutual dependence affect international relations. In many instances, political motivations form the basis of mutual dependence. When Willy Brandt became Foreign Minister in the Federal Republic of Germany in 1966, he developed the policy of Neue Ostpolitik,eventually leading to a 1970 agreement accepting the borders of Berlin. Henry Kissinger pioneered the policy of détente that led to a considerable reduction in U.S.-Soviet tensions; including the SALT I strategic arms reduction talks, and the “opening” of China leading to an anti-Soviet Sino American alliance (Solomon W. Polachek 2006).
However, underlying most of these instances of mutual dependence are economic considerations which are normally attained through trade among partners. Willy Brandt sought closer trading relations with Eastern Europe and the Soviet Union (Solomon W. Polachek 2006). According to Solomon W. Polachek (2006), this helped prop up the weak communist economies, but it also highlighted the contrasting wealth and poverty between the east and west and probably ultimately set the stage for reunification. Certainly from the Soviet perspective decelerating the arms race reduced the drain on social and economic resources, but equally America’s economic vulnerability to nuclear holocaust was unimaginable. Certainly from China, Kissinger and Nixon sought trade in one of the fastest growing world markets (Solomon W. Polachek 2006). Finally, more recently, mutual dependence based on economics served as justification for the European nations to come together to form the European Union.
In this article and particularly this section, we concentrate on economic interdependence and in particular what political scientists refer to as “vulnerability interdependence” in the international relations literature .This type of interdependence attempts to capture the cost of rupturing economic relations with another country. In fact, most quantitative studies of interdependence and conflict focus solely on economic aspects because economic aspects are more easily measured. As we will see later, most use bilateral trade (or some trade related measure such as trade share or a trade-relative-to-GNP statistic) as the measure for interdependence, but even this, is a simplification of issues. As will be explained, theory predicts “gains from trade” (relative gains) to be the most relevant indicator of
economic interdependence. However, because of the difficulty nature of measuring trade gains, almost all research uses some variation of trade level to measure mutual economic dependence. But before we jump to this conclusion, we scrutinize the trade (interdependence) – conflict model first to put us in a clearer perspective of the theory.
2.3 How Trade impacts on Conflict and Cooperation
As alluded to earlier in this article, the proposition that trade deters conflict
has roots as far back as the sixteenth century. First, theologian philosophers such as Erasmus (1981) realized that war was “bad.” Later, the French monk Crucé (1623) wanted international bodies to arbitrate international disputes. This point of view was later taken up by Rousseau (2005) who realized that using organizations designed to arbitrate disputes would bring nations closer through communication. Related to arbitration, Immanuel
Kant (Perpetual Peace: A Philosophical Sketch, 1795) argued that perpetual peace could be achieved through appropriate governance in which all means used to wage war should be prohibited in order to establish mutual trust among nations. And trade is seen as a long bridge to this. But whereas Kant believed mutual trust must be legislated, forty-five years earlier, in 1750, Baron de Montesquieu provided an economics approach to achieve mutual trust. He stated that “peace is the natural effect of trade” because “two nations who trade with each other become reciprocally dependent” leading to “their union … founded on
their mutual necessities” [(1900 , p. 316)].
Muchlater, British statesmen Cobden (1995, originally published in 1846), Bright (1883), as well as economists Angell (1913) and Viner (1937) espoused these same views. Perhaps, for this reason Hirschman (1945: v, xvi) emphasized ‘the politics of foreign trade’ by which he spelled out “the possibility of using trade as a means of political pressure … in the pursuit of power.” Cutting existing trade for political reasons reduces gains from trade, though these losses can be somewhat mitigated if other trading partners can be found. But even here, finding other trading partners is costly.
3.0 Economics Model of the “Peace Through-Trade” Liberal Hypothesis
3.1 Extensions of the Conflict-Trade Model.
A number of factors influence gains from trade. These include type of trade, country size, market competition, country contiguity, tariffs, foreign aid, and the number of countries in the international system and all these by implication lead to fewer conflicts among trading nations. Just recently, a number of authors have begun to examine some of these aspects of the conflict-trade relationship. A rise in trade generates cooperation among trading
nations and consequently lead to less conflicts (Polachek, S. W. (2002b).
Comparative advantage enables both countries to increase their welfare through trade. Thus trade is welfare enhancing creating both tangible and intangible products such as material well beings, peace and harmony. In this regard we define conflict to be an unfriendly political action from one country to another that is hostile enough to lead the second country to cease or at least diminish trade. Therefore no country is motivated to start conflict with any other trading partner at the expense of cooperation which may result in sour trade relationship. For the sake of trade every country stands to gain to maintain tranquility.
Polachek (1980, 1992) developed a framework to analyze the trade-conflict link. In his
model, a country’s preferences can be represented by a utility function over the consumption, C, of m-goods that are produced in a k-country world. Furthermore, each of these countries can initiate conflict or cooperation on any of the k-1 countries towards which the level of intensity is denoted by a 1x (k-1) vector Z. Preferences for the level of conflict or cooperation to achieve outcomes is deemed important by a country generating a derived demand for it. Furthermore, conflict has effects on the terms of trade or prices in
the world markets. Algebraically, the problem for the actor country is to maximize:
L =U(c1 ,c2 ,z)+λ[ p1q1 + p2 q2 – p1 c1 – p2c2 – pz z] , ……………(1)
by choosing the amount of consumption of the two goods and the level of conflict to initiate against the target country while taking into account the effects that this has on prices. One could think of the problem as being solved in two stages. In the first stage, individuals decide on the amounts to consume of the different commodities, yielding the composition of imports and exports. In the second stage, the government decides on the level of conflict, z, to undertake. We can rewrite the problem as
Max L =U(c1,c2 z) +λ[ p1 x1 + p2 m2 –pzz] , …………………………….(2)
exports, x1 = q1 –c1 and imports, m2= q2 –c2 .
In other words, we assume that conflict directed towards the other country reduces or has no impact on the price the country obtains for its export commodity and increases or has no impact on the price the country pays for its imported goods. Greater conflict by the actor towards the target requires the actor to reduce the price of their exports to induce them to purchase the good and leads to them being charged a higher price for the imports from the target country.
The problem for the actor country is to maximize equation (1) above subject to their resource constraint and the country’s level of technology. Obviously, the greater the welfare loss the greater the costs of conflict, and the greater the incentive for cooperation, independent of the country’s innate preference for peace. Even if conflict does not directly diminish trade, but instead leads to trade restrictions that ultimately affect the terms of trade, the same result applies. In this case, less desirable terms of trade result, implying a new equilibrium and lower welfare. Again, the implicit price of conflict is the lost welfare associated with diminished trade brought about by conflict.
3.2 Foreign Direct Investment (FDI)
Not only is trade increasing, but the amount of capital flows is as well increasing.
As global integration has expanded, countries have moved into a more complicated interdependent network. FDI’s annual growth rate exceeded the growth of international trade over the past decade and broke through the trillion U.S. dollar level in 2000 (Solomon W. Polachek 2006). This contrasts with the period of the 1960s and 1970s when countries were concerned with the possibility that their sovereignty would be reduced by multinational FDI, mercantilist approach. The focus now is on the positive effects of FDI and other types of capital flows on the home and host countries’ economies. This change in attitude was complemented by the adoption of favorable policies by many countries to attract FDI which did away with the static mercantilist approach. These developments raise the possibility that the role of FDI in determining interstate relationships has increased in significance. Research on the impact of foreign investments by multinational corporations (MNCs) on the international system predates the recent increase in globalization.
The more conventional literature [Vernon (1971), Gilpin (1975) and Nye (1974)] takes the view that MNCs are tied to their home countries and that nation states are still the principal actors in the international system. However, if multinational firms are essentially national firms competing with one another around the globe, as Gilpin (2001) points out, then one would expect some correlation between the direct investments of multinationals and the foreign policy of their home countries.
There is now a body of literature examining the determinants of FDI. But FDI’s effect on international relations is still at its infancy. Thompson (2003) argues that FDI draws countries closer to each other thereby decreasing the probability of deadly conflicts. In empirical work using post World War II data, he illustrates that reciprocal FDI flows leads to fewer instances of conflict. Using the current political environment he argues that United States, China, and Taiwan are drawn closer together because of FDI flows between the countries instigates the necessity of corporation in order to maintain stability. Further, China has a lot of equity flows in USA as foreign debt, a situation that has helped to mitigate the balance of payment deficit problems in USA and enhanced international relations between the two nations, in this regard no country in its right frame of mind may think of engaging in conflict with China.
Based on information from World War I, Thompson argues that the warring countries had little or no FDI leading to diminished amalgamation. In a sense this latter finding helps to explain the paradox that if trading nations participated in World War I, as conflict-trade theory argues then trade should have deterred conflictive activity.
4.0 Game-theory: Signaling Models
In the typical game theory model, parties vie to split contested resources and therefore call for either cooperation or defection among nations. As already alluded to, trade produces gains, which must be divided between two (or more) trading partners. Accordingly, trade gains become the contested resource and game theory is invoked to determine how each party behaves to determine the division. But, in the process of dividing a given resource, it becomes obvious that what one party gains, the other loses, leading to what is called in theories of international relations as zero sum game, so that the process itself has a conflictive nature. In fact, Schelling (1960) and later on Hirshleifer (1995) view conflict in this manner.
Thus to game theorists the logic is simple: first, trade creates trade gains; second, trade gains must be divided; finally, dividing trade gains leads to conflict. Following the logic through, trade leads to conflict . Again there is no contradiction with the liberal trade-conflict model which states that trade yields more cooperation than conflict. Two issues are involved here: whether dividing trade gains necessarily yields conflict as game theoretic models imply, and whether the conflict emanating from splitting trade gains outweighs the necessary cooperation needed to protect the trade, which created the gains in the first place.
5.0 Observations from the Trade Conflict Model Regarding the Democratic Peace
Two theories are given to explain why democracies rarely fight each other. This can also implicitly attest to the fact that in real life we have seen how big the volume of trade between two democracies is. However, empirical evidence also shows how non democracies and democracies trade volumes have inclined to be higher than what the theory predicts such as the trade between USA and China. Therefore, the first theory is billed as cultural-normative, and the second as structural. In reality both are related because in part structural determinants are possibly culturally induced. Cultural normative theories are based on Kant(1795), Wright (1942), and Doyle (1986), and advanced by Russett (1989) and others. They claim that adjudication and bargaining are so embedded within democratic societal norms that democracies are able to solve disputes peacefully, especially with other democracies even though recent evidence show to the contrary like the trade between China and USA.
Structural school, advanced by Morgan and Campbell (1991), and based on Rummel (1979a), Hagan (1987), Domke (1988), and Bueno de Mesquita and Lalman (1992), argue that there are so many checks and balances in the democratic decision procedure that make the resort to fighting difficult. Though one might have difficulty using this logic to explain why democratic actors don’t fare much better against non-democratic targets than non democracies. It is argued that non-democracies such as dictatorships need less justification to go to war. Zinnes (2004) uses propositional calculus to provide an explanation based on normative as well as the structural factors.
Characterizing these two theories requires separating identifiable structural distinctiveness defining decision constraints which explain why democracies rarely fight each other and therefore tend to have huge trade flows among the trading democracies. Failing to find such characteristics would lead one to conclude in favor of innate cultural/normative characteristics of democracies and spurious conclusions.
Before turning to the conflict among democracies question, we attach this issue to the past results relating trade and conflict: To be applicable, one would have to show that democratic
dyads exhibit greater trade (or greater gains from trade) than nondemocratic dyads, and that as a consequence the greater trade contributes to greater cooperation and the less conflict. Democracies cooperate more and conflict less to protect greater welfare levels arising from trade gains.
By cooperating rather than fighting, trade is protected and individual welfare is maximized by per capita increases in GNP attributable in part to these gains from trade. To test the validity of this scenario one must illustrate first that democratic dyads in fact trade more, and show second that this greater trade is related to lower amounts of conflict.
Consistent with the above hypothesis, democratic dyads exhibit far greater levels of trade and cooperation. The mixed dyads have higher trade levels in between. This might be somewhat puzzling to the above hypothesis that trade is directly related to conflict since as one would expect conflict to be in between the purely democratic and purely non-democratic dyads.
Other factors relating to this are country size and multilateral interactions. The larger the country is the bigger the size of trade volumes and this subsequently lead to reduced conflicts among nations, partially this can explain the huge volume of trade between China and USA. On the other hand multilateral interactions also enhance trade volume in that bilateral trade is not independent of other countries. Feng (1994) relates trade to alliance conflict. He finds that the relationship between trade and alliance conflict depends upon what he calls externality cost. As such, post-World War II trade between the United States and an ally (e.g., Britain, Canada, France, West Germany, Italy and Japan) increased in direct proportion to conflict between the United States and Soviet Union. How alliances form and how third parties intervene in ongoing conflicts form a large political science literature. In this vein, Altfield(1984), Morrow (1991), Powell (1991), and Simon and Gartzke (1996) among others base alliances on security gains from joining a coalition. Altfield and Bueno de Mesquita (1979) use an expected-utility model to predict that intervention depends on the utility gained from one or the other party winning. As such intervention is more likely if a third party gains considerable utility from one country winning, instead of another. Therefore, one can incorporate multilateral interactions into the conflict-trade framework described above.
The proposition that international trade specifically, and economic interdependence in general reduces conflict between nations has a long tradition in the history of economic thought and now that of international relations. The argument proposed is that trade leads to welfare gains that countries do not want to put in jeopardy, losing it by engaging in trade-disruptive activities such as wars or other forms of conflict. Thus far, until fairly recent times economists have not applied some of the modern tools of economics to explore this proposition though scholars from international relations have endeavored. This is surprising given the large cost to society of diverting resources towards a purely predatory or redistributive motive instead of productive activity. Given the slow pace of economic development in large parts of the world ravaged by conflict, and the dim prospects of a convergence of their income with those of the developed world, it seems the incentives to explore this topic is of some urgent.
Our appraisal of the empirical literature on the conflict-trade relationship indicates that researchers use several different historical data sets to gauge conflict. In this regard, the paper has shown that overwhelming evidence indicates that trade reduces conflict regardless of the proxies used to measure the gains from trade and conflict.
Our inclination is for using events data because this data contain both information on conflict, as well as on cooperation between nations. As such, it allows for exploring a range of international interactions and not just the extreme endpoint of outright war. We also note that recent empirical results show that FDI plays a similar role as trade in affecting international interactions. More specifically, we find that the flow of FDI has reduced the degree of international conflict and encouraged cooperation between dyads. This is an especially important result since one of the main characteristics of globalization has been the reduction of barriers to international capital flows and as a consequence the amounts of capital and equity flows have expanded enormously dwarfing potential conflicts. Furthermore, we conclude that to a large extent the observed evidence that has been found that democracies are less prone to fight with other democracies can be explained by accounting for the larger trade relationship between democracies.
The policy implication of our finding is that further international cooperation in reducing barriers to both trade and capital flows can promote a more peaceful world. Additionally, efforts at democracy while laudable should not have the expected appeasing effects between neighbors unless the appropriate institutions are developed simultaneously to promote trade and capital flows between nations. It is by this vehicle that resources will be freed to address more urgent needs in the international system.
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