Introduction
The aftermath of the Second World War resulted in trade flow disruption by armed conflict. As a result, the shifts in economic structures, trade regulations, and established trade patterns prompted nations to modernize the global trading system (Krpec & Hodulak, 2019). In this way, policymakers welcomed international trade as being crucial for economic progress as they moved away from the isolationist principles of the interwar era. Throughout the 1950s and 1960s, international trade expanded quickly and steadily in this modern cooperation structure. Overall, the second world war was a fundamental event that shaped the trajectory of international trade, and its failure in occurring would have crippled global trade advancement.
Reasons for the Growth of Global Trade Post-War
Liberalization of Trade Policies
After the adverse ramifications of World War II, American policymakers thought it was crucial to revitalize global economic norms. Officials thought this was essential to allowing the world economy to rebuild from the destruction of the conflict and prevent subsequent hostilities by resolving international issues (Krist, 2020). As a result, the General Agreement on Tariffs and Trade (GATT) was signed in 1947, and through the GATT, the United States spearheaded the globe in eight worldwide talks to lower barriers to trade (Greenlaw et al., 2017). Exacerbated by this massive liberalization of exchange controls, exports, and imports, which made up just about 160 billion dollars of the global gross domestic product, increased to 385 billion dollars in 2009, preceding the worldwide economic and financial crisis (Greenlaw et al., 2017). This reduction of trade controls was one of the crucial factors that influenced the growth of international trade.
The Bretton Woods System
In the 1960s, the Bretton Woods era’s golden years saw the fastest growth in global trade. Thus, the Bretton Woods System may have significantly influenced the post-World War II trade boom. This is so because the trading system offered a secure setting for world trade. Therefore, such an efficient setting for currency unions enhanced world commerce through absolute exchange rate stabilization. As a result, it enhanced exchange rate volatility, in particular. Based on Kugler & Straumann (2020), the Bretton Woods System members committed to a preset peg versus the US dollar, with just 1% permitted for deviations. The worldwide pegging supported more stable foreign exchange rates ideal for global commerce.
Benefits of International Trade to the World Economy
The globalization of countries has increased their interdependence, and most economies place a significant emphasis on international commerce. Hence, international trade has been beneficial to the world economy. It gives customers more alternatives and boosts competition, forcing companies to provide commodities that are affordable and of quality. Precisely, countries such as China have gained a comparative advantage from global trade by concentrating on manufacturing their items; for instance, their high technology in manufacturing smartphones sold globally covers a market share of 22.5% as of 2022 (Counterpoint, 2022). International commerce has benefited economies, even when some nations restrict it through tariffs and quotas to protect home industries.
Benefits of International Trade to the US Economy
Additionally, international commerce has been crucial for the US economy. Trade is essential to the prosperity of the United States because it boosts economic expansion, promotes domestic employment, raises life quality, and enables citizens to sustain their families with reasonably priced goods and services. For instance, the United States was the world’s most significant exporter of trade items in 2017, with $2.35 trillion in exports (United States Trade Representative, 2022). Commerce aids in ensuring that the US economy remains vibrant and competitive.
Conclusion
Since the end of World War II, the global strategy for trade deals has had enormous achievements. The international economy has profited from trade liberalization, mainly propelled by the trade agreements framework. Conversely, the Bretton Woods System underscored global trade as it created a more diverse foreign exchange system. Thus, trade has been critical to the global economy as it has ensured countries have adequate access to goods and services.
References
Counterpoint. (2022). Global smartphone market share: By Quarter. Counterpoint Research. Web.
Greenlaw S. A., Shapiro D. Taylor T. & OpenStax College. (2017). Principles of microeconomics 2e (Chapt. 20). OpenStax College Rice University.
Krist, W. (2020). Chapter 1: US trade policy in crisis. (2020). Wilson center. Web.
Krpec, O., & Hodulak, V. (2019). War and international trade: Impact of trade disruption on international trade patterns and economic development. Brazilian Journal of Political Economy, 39(1), 152–172. Web.
Kugler, P., & Straumann, T. (2020). International monetary regimes: The Bretton Woods System. Handbook of the History of Money and Currency, 665–685. Web.
United States Trade Representative. (2022). Benefits of trade. Web.