The impact of trade and globalization on the economic development of nations

Abstract

The rise of globalization has exacerbated disparities between developing and developed nations. This economic imbalance may be explained through the different export strategies (e.g., commodity vs non-commodity) that countries employ. This paper explores how trade and globalization impacts the economic development of nations with a specific focus on how different export strategies impact outcomes. Focusing on one developing nation, Bolivia in Latin America, and one developed nation, the United States, this paper provides an explanation of why exporting non-commodities leads to greater development. Fundamental learnings to support this include the promotion of more diversity in a workplace, higher rates of innovation, higher-skilled jobs, higher national wages, better working conditions, and non-value detracting FDI. It also enables countries to specialize in goods or services that they have comparative advantage in, in order to foster greater revenue. This research allows for essential insights into notions for development trajectories; developing nations can adapt their export strategies by diversifying into manufactured goods, increasing government expenditure into the secondary sector, and capitalizing on natural resources by revising resource-extracting trade agreements.