HomeFinanceBankingHow Global Inequality is Affected by Trade Regulations

How Global Inequality is Affected by Trade Regulations


This article delves into the multifaceted implications of the global trading system, which is governed by intricate laws that regulate international trade. One significant consequence of this system is the exacerbation of global inequality, as it perpetuates an uneven distribution of wealth and hinders economic advancement across the globe. Despite the potential for economic development, the global trading system has faced criticism for widening the gap between developed and developing nations. The objective of this article is to comprehensively analyze the various ways in which trade laws contribute to the issue of global inequality, emphasizing the urgent need for a more equitable and impartial economic climate.

Revamping the Trade System: Uncovering the Roots of Historical Inequality and Imbalanced Agreements

Tracing the Roots of Global Trade: A Legacy of Colonialism and Exploitation
The contemporary system of global trade finds its origins in the colonial period, when European nations colonized various regions, including African countries, and exploited their resources. Although these nations have gained independence, they continue to struggle to break free from the economic dominance of their former colonizers. Consequently, they are often compelled to enter into trade agreements that favor the interests of the West.
Presently, these agreements continue to hinder the economies of developing nations, ensnaring them in agreements that predominantly benefit Western nations. These arrangements frequently require developing nations to remove tariffs and trade barriers, allowing Western products to saturate the market and displace local industries. Moreover, these agreements typically concentrate on commodity exports, perpetuating cycles of subordination and underdevelopment.

Navigating the Conundrum of Subsidies and the Consequences of Dumping

Impact of Western Trade Policies: Examining the Downside of Subsidies and the Menace of Dumping
Trade policies adopted by Western nations, such as subsidies, can have an adverse impact on developing countries. Developed countries offer financial assistance to their domestic industries, enabling them to manufacture goods at artificially low prices. These subsidized products are exported to developing markets, where they are sold at prices that local industries cannot match, a phenomenon commonly known as dumping. This practice not only harms local businesses but also results in economic downturns and widespread unemployment.

In the agricultural sector, Western subsidies have particularly devastating effects on farmers in developing countries. Surplus agricultural produce from Western countries is frequently dumped into these markets, driving down prices and creating obstacles for local farmers to compete. This problem not only harms the agricultural sector but also fuels food insecurity and rural poverty.

Risks and the burden of debt in restructuring initiatives

Over the years, developing nations have amassed significant debt due to unfavorable trade deals and economic policies imposed by developed countries. To tackle this debt, international financial organizations such as the World Bank and the International Monetary Fund (IMF) implemented Restructuring Programs (SAP). However, these programs demand developing nations to carry out economic reforms, including trade liberalization and state-owned enterprise privatization.

Unfortunately, these reforms frequently have dire implications for developing economies. With the removal of trade barriers and the influx of low-cost Western products, local industries are adversely affected, leading to a loss of numerous jobs. Furthermore, the privatization of crucial services like education and healthcare leads to a decrease in accessibility and a surge in inequality.


The existing world trade system, which prioritizes the interests of developed nations, perpetuates inequality among countries. Developing countries are subjected to exploitation and penalties through unjust trade practices, subsidies, dumping, and debt. There is an urgent need to establish a more equitable global trade system that prioritizes the needs of developing nations and supports sustainable development.

To achieve this goal, efforts should focus on renegotiating unfair trade agreements, eliminating harmful subsidies, and reforming international financial institutions to better cater to the needs of developing countries. Furthermore, these nations must break the vicious cycle of dependence and underdevelopment by diversifying their economies and promoting local industries. Only then can we envision a world economy that is equitable and just.




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