Global trade is also known as international trade it is simply the import
and export of goods and services across international boundaries. Trade allows country to specialize and promotes healthy competition. Trade depends on mix of demand and supply in different countries. In September 27 of the year 2016 the World Trade Organization predicted that the GDP for trade of goods will be 2.8% but implicitly it turns out to be 1.7% which happens for the first time in 15 years placing the global trade in a not so good position or in a worrying kind of state; the cause could be depressed economies and bunged up protectionism. However, in 90s up to early 2000s the growth on the global trade was unnaturally high, two factors added to the momentum during that period which are the falling cost of business and Chinas entry to the global trade. Lower costs encouraged web of supply chains to form while chinas entry with spectacular economic growth drove over huge increase in investment. As of 2016, the process may have run its course meaning that the costs are not falling as quickly as before and china switches to a more consumption-led approach to economic growth which will cause naturally slow growth in trade volumes. There has been analysis made by the World Economic Outlook in October of 2016 which sorts out the factors affecting the slow growth in global trade, the analysis fins out that the main culprit for such state was the worlds general economic funk wherein the IMF expects global GDP to grown at 3.1% in 2016 but markedly slower than the 3.4% enjoyed last two years ago. The slowdown is cause by weak global demand. If the growth in investment is weak it can particularly drag advanced and emerging economies, other factors such as protectionism plays a smaller role or effect for such slow growing state. This slow growth in global trade frustrates policymakers but it is not a hopeless case though it would be hard to boost demands it is not impossible to do so. The GDP and trade fed off one another. In order to start a virtuous cycle, one way to do this is to ratify and implement global or international agreements such as the Trans-Pacific Partnership between America and 11 other countries around the Pacific Rim, or the Regional Comprehensive Economic Partnership; these kind of deals and agreements cannot be done overnight, in order for these deals to come to light it requires political will and a lot of convincing to do for disgruntled electorates but if politicians really want to boost trade, they should start by trumpeting virtues.
II. FIVE FACTORS AFFECTING THE GROWTH OF WORLD TRADE:
1. Protectionism Protectionism is a theory or practice wherein countrys domestic industry place taxes on imports. Doubt can spring from interdependence when it comes to interconnected growth and progress. Given the fact that there is a clear disparity between the wealth and influences of states, it is no surprise if states become uncertain and skeptic when it comes to unified effort for global progress. Queries whether global or regional trade will be beneficial can arise as it questions the profit and advantage that states will reap in the movement and thats where protectionism starts. The idea of wanting absolute advantage and putting your states interest high above anyone else without making compromises eventually leads to isolation which ultimately makes economic growth stagnant. 2. Chinas Transition when China switches from investment to a more consumption-led approach to economic growth causing the trade in volumes in being naturally slow. Investment led approach meets the interest of both the country and the global trade while consumption-led approach focuses on the interest and growth of the domestic or local market. China can go from being a net lender to a net borrower from the rest of the world hence, this scenario only can go either way it could lead to extremely positive outcome or it will lead us to a global recession. If Chinas economy grows far higher than expected it can become solely dependent on its own and it wouldnt need international trade or wouldnt look for international market anymore. China is a huge market and plays a vital role in the international market; if the global trade loses the demand of China, the global trade could enter great devastation and decreasing growth. 3. Falling cost of business lower costs encouraged a web of supply chains to form, so that parts that were previously manufactured domestically could be shipped and assembled in foreign countries. Now that costs are not falling as quickly, the process may have run its course. 4. Weak Global Demand weak investment growth is a particular drag in both advanced and emerging economies. The demand eventually sets as the catalyst for economic integration production would be meaningless without guaranteed consummation. Thus in return, weak global demand stagnates global trade as if taking away one pillar and foundation for stable economic growth. 5. Worlds General Economic Funk Progress can be unpredictable in a way that it might move forward and backwards as well. Take the GDP expectation of the International Monetary Fund as an example; the IMF expects global GDP to grow at 3.1% in 2016, markedly slower than the 3.4% enjoyed two years ago. Situations vary from day to day, regimes changes, trends transition and economic global economic growth is no exception. Add the fact that todays world is about to enter an unknown period with the rise of populist leaders across the world it will come as no surprise if the world were to experience a couple of downfalls and collapses on its way to integration. Wed also have to remember that the world is no stranger when it comes to economic funks it has happened before and there is no way that it might not happen again. Global economic funks happen in a blink of an eye whether it is due to failed investments, failed international cooperation or differences in ideals. III. IDENTIFY THREE FACTORS AND PROVIDE HOW THESE FACTORS CAN BE IMPROVED: a) Chinas Transition Make a trade deal under discussion that includes India and China wherein it is for the best interest for the country itself and also for the growth of global trade. Given the large population of China and its broad economic influence, power and sphere, it is indeed no surprise if its economy can serve as a catalyst for global trade. If China were to isolate itself and goad its policies towards a more self- centered trade deals, this could mean as a bad news in global economic sphere as many countries rely on its economy as well. Therefore, it is important to establish effective trade deals that shall encompass both the states interest and global progress as well. b) Weak Global Demand Boosting demands sounds nice but takes a lot of hard work and one way of doing so is ratifying and implementing international agreements to lower trade barriers. Weak global demand often springs from strict trade barriers which essentially gives states the idea of reaping unsatisfactory and unequal benefits to states involved. States, by no means, have disparity in both wealth and influence in the global sphere. And with todays system, states often build a faction in order to integrate economic growth and drive progress even further. This can be one of the solution in order to strengthen global demand strengthen regional and international cooperation. Take EU for example. The European Union has one of the most successful economic regional integration which eventually became a deciding factor for the member states of the union to be not only of the top richest countries across the globe but influential as well. If we take this as an inspiration and aspire to promulgate international agreements that will transcend borders and reach the global sphere, the chances for greater global demand and progress will increase as well. It is indeed true that it would be a greater challenge but it is important to remember hard work reaps greater reward not only for states as an individual but as a whole as well. c) Protectionism Given the fact that the world is indeed progressing towards interconnectedness and interdependence despite of differences; todays modern era has defined economic and political ideals as two different spheres which will eventually co-exist. The world is indeed going towards a different direction far from what professionals has expected centuries ago. In the past, ideals come pair by pair: authoritarian states sought for strict trade and realist economic ideals while liberal states sought for free-trade enterprise and laissez faire policy. This is far too different from todays principles and paradigms which absolutely separate economic ideals from political ones which is why even an authoritarian state such as China and Russia still pursues a liberal economic ideal despite of its dictatorial regime. In other words, the world seems to cope up with the idea of progressing through free enterprise despite the difference in political ideals in the realization that it is not only beneficial for global progress but in their personal interest and growth as well.