International Economy the Recent Economic

International Economy

The recent economic roller coaster that the economy went through from 2005 to 2009, has led to a host of debates on issues concerning the various causes of the volatility. What happened was the U.S. economic implosion, paved way for a worldwide recession. As the U.S. dollar started to depreciate and the debt crisis became severe. This led to economic shocks such as: the bankruptcy of Lehmann Brothers and Bear Stearns. At which point, the U.S. government announced various bailout plans, in an effort to mitigate the possible effects that this could have on the economy. This has led to a variety of opinions, as to whether such institutions should be protected or not. As a result of these and other actions that was taken during the recent financial crisis. Some kind of frame work needs to be established, to help regulate the excess abuses that occurred in the economy. However, the problem is that economists still differ in their opinions, as to the application of different economic theories. This has paved the way for a variety of recommendations and opinions, about how to deal with the underlying challenges facing the economy in the future. Where, everyone seems to understand the root causes of the global economic disaster, but none seem to be successful in providing effective solutions. This is troubling, because the inability of the world community to work together means that various efforts such as: resolving different debt crisis and conferences to address the problem are pointless unless some kind action is taken. To fully understand how various countries can work together to address these challenges require: examining how the world economy can benefit from institutions such as the World Trade Organization (WTO) and how everyone can work together to prevent similar situations in the future. Once this takes place, it will provide the greatest insights as to how various economic excesses can be addressed.

The International Economy and World Trade Organization

Today, World Trade Organization is playing vital role in the international economy, by creation of clear guidelines pertaining to: the abolishment of trade barriers and the promotion of free trade (on an unprecedented scale). The free trade relationships could not have been possible without organizations such as WTO. As their primary focus is: on the reduction of trade barriers between countries. In the current international scenario, the WTO can benefit the international economy by playing a vital role in creating friendly relations between rivals. Where, they can ensure that agreements between such countries will be equally beneficial for everyone (World Trade Organization 1999). The best example of this can be seen with the India and Pakistan. As the two rivals have decades of animosity and conflicts, ranging from economic issues to cultural challenges. In this case, the World Trade Organization can play a critical role in developing a trading relationship between the two countries. As it can help in the promotion of international trade, which will benefit Pakistan, by giving it the exposure to a market of more than one billion people (India). This would lead to increased export earnings and the establishment of host of industries on a vast scale (thus creating jobs in the Pakistani economy). The creation of jobs will be beneficial to Pakistan, as it will lead to: an increase in the standard of living, a decrease in social costs and an improvement in political stability. On the other hand, its neighbor India will benefit from Pakistan's geographical neighbors to include: Iran, Afghanistan, China and Tajikistan. As India would be able to benefit from Iran, due to the fact that: the country is full of natural resources (which could help India in meeting its demand for oil and gas). However, since the WTO agreement requires all the signatories to remove trade barriers, there is a risk that developing countries will suffer at the hands of developed nations. As they (the developed nations) will export various commodities from a particular region, in return for the importing of primary goods. The big challenge is maintaining a balanced relationship, where the more developed nations will not take advantage of the developing ones and vice versa. In this aspect, the WTO can play a vital role in addressing possible imbalances that could occur in these associations.

The Role of International Community to Ensure Economic Stability