Trading Blocs
Free trade has been a common strategy used to promote trade within a globalised world, according to Investopedia it is "The unrestricted purchase and sale of goods and services between countries without the imposition of constraints such as tariffs, duties and quotas". With the promotion of free trade though in our globalised world the development of trading blocs has also been a common feature as a form of protection.
A trading bloc can be defined as an agreement between a group of countries who protect themselves from imports of non-members of the trading bloc by promoting free trade between members. Often trading blocs are created around geographic regional areas for example the European Union trading bloc is based around the European region. A trading bloc can be created for a number of reasons, to begin with help protect industries for example the European Wine region has 2 billion in funding every year to help protect it against new world wine industries. Furthermore trade blocs prevent 'dumping' which is when a country dumps a product into another country to sell at unrealistically low prices. One other argument is to protect domestic employment from being outsourced in a heavily globalised world. The emergence of trade blocs has been numerous in the last few decades with some form of trading bloc in every part of the world. Significant trading blocks include the European Union, NAFTA, G8, G20 and APEC. |
Ireland's membership of Trading Blocs
Due to the fact that Ireland is a relatively small economy it is only part of two major trading blocs/ trade agreements. The first and most significant one is the Irish membership into the European Union and secondly the World Trade Organisation.
The European Union
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The European Union was formed after the Treaty of Rome in 1957 originally named the European Economic Community which was a free trade agreement between the original six member nations of West Germany, Luxembourg, France, Italy, Belgium and Netherlands. The aim of the European Economic Community upon it's formation was to create a single market for goods and services which weren't imposed by any trade barriers. As well as a free trade agreement the European Economic Community was also a trading bloc as strong tariffs were implemented against non-member nations such as Japan which is why today it is commonly referred to as both a trading bloc and a free trade agreement because it promotes free trade between member nations but it implements protectionist policies against non-member nations. Today the European Union consists of 28 member nations which amasses to 508 million people accounting for 33% of global trade.
Ireland is one of the 28 member countries which makes the European Union. It joined the European Union on the 1st of January 1973 alongside the United Kingdom. After joining the European Union the small economy of Ireland which had heavily relied upon it's agricultural industry became known as 'the Celtic Tiger' as the economy kickstarted entering into decades of prosperity and high economic growth.
Ireland is one of the 28 member countries which makes the European Union. It joined the European Union on the 1st of January 1973 alongside the United Kingdom. After joining the European Union the small economy of Ireland which had heavily relied upon it's agricultural industry became known as 'the Celtic Tiger' as the economy kickstarted entering into decades of prosperity and high economic growth.
World Trade Organisation
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The World Trade Organisation was formally formed on the 1st of January 1995 but had been operating under the General Agreement for Tariffs and Trade since 1948. The World Trade Organisation was formed as an overarching body which would help to supervise and liberalise international trade. The WTO is run by 160 member states and 28 observer states who work together to come to agreements on trade issues. It's general aim is to supervise trade negotiations between countries as well as creating a more globalised world in which international trade is promoted as well as having a set of international trade rules which are enforced upon it's member countries.
Ireland is one of the original World Trade Organisation members who joined in it's foundation year of 1995. Before this though Ireland was also a member of the General Agreement for Tariffs and Trade organisation which it had joined in 1967. The WTO has been a significant organisation for Ireland helping it to create new trade agreements with other countries.
Ireland is one of the original World Trade Organisation members who joined in it's foundation year of 1995. Before this though Ireland was also a member of the General Agreement for Tariffs and Trade organisation which it had joined in 1967. The WTO has been a significant organisation for Ireland helping it to create new trade agreements with other countries.
International Monetary Fund
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The International Monetary Fund is another international organisation which helps to promote international monetary cooperation. It was formed in 1944 with the World Bank and after World War II it was tasked with the job of overseeing and supervising the exchange rates of the respective nations. It began with 28 members which has now expanded to 188 members worldwide. The International Monetary Fund today is there to support countries with the challenges of globalisation as well as take advantage of the opportunities that globalisation brings about. Furthermore it provides policy advice as well as financing for countries in economic difficulty. It's main aim though is to ensure financial stability for all countries in the world and help prevent situations like the Great Depression, GFC and the European Debt Crisis.
Ireland is a member of the International Monetary Fund after joining in in 1957. Because of it's small economy Ireland is very small within the IMF. Recently though it has been involved with the IMF who were part of international loan of 85 billion Euros given to Ireland during the GFC and European Debt Crisis which was a major reason as to why Ireland did not collapse. Furthermore their involvement with Ireland has been with helping to develop the Austerity package which would bring Ireland out of recession. Overall showing the membership that Ireland has with an international Trade organisation known as the International Monetary Fund.
Ireland is a member of the International Monetary Fund after joining in in 1957. Because of it's small economy Ireland is very small within the IMF. Recently though it has been involved with the IMF who were part of international loan of 85 billion Euros given to Ireland during the GFC and European Debt Crisis which was a major reason as to why Ireland did not collapse. Furthermore their involvement with Ireland has been with helping to develop the Austerity package which would bring Ireland out of recession. Overall showing the membership that Ireland has with an international Trade organisation known as the International Monetary Fund.
Organisation for Economic Cooperation and Development
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The Organisation for Economic Cooperation and Development was formed on the 14th of December 1960 with 20 members which then expanded by another 14 members today. The OECD is an organisation which was formed to promote and develop economic policies which would help people around the world achieve a higher economic and social well being. The Republic of Ireland was one of the original members joining in 1961.
Trade
Trade can be defined as the voluntary negotiation of goods and services usually in exchange for the commodity money. Trade is a global process these days in which countries will import what they cannot produce and export what they can produce for the lowest cost also known as specialisation.
The Republic of Ireland like any other country participates in trade. Due to the fact that Ireland is a part of the European Union, it's trade is heavily invested with EU member countries.
The Republic of Ireland like any other country participates in trade. Due to the fact that Ireland is a part of the European Union, it's trade is heavily invested with EU member countries.
Ireland's Major Export Industries
Chemical products - 57% - GlaxoSmithKline IT Industry -16% - IBM and Microsoft Medical Instruments- 8% |
Ireland's Major Import Industries
Machinery-18.37% Chemical Products-18.35% Mineral Products-15% e.g. Refined Petroleum |
Ireland's Major Export Partners
United States of America-19% United Kingdom-14% Belgium-Luxembourg-12.7% |
Ireland's Major Import Partners
United Kingdom-34% United States of America-12.9% Germany-8% |
Overall it is clear that although Ireland is developing trade partners with countries like the USA it's trade roots still remain with Europe and the trade bloc of the European Union.
Financial Flows
Financial flows play a major role within the global economy due to it's cruciality within modern economies. Through the process of globalisation financial flows have been able to link the economies of the world through the flow of money in the foreign exchange markets as well as direct investment into economies.
Financial flows throughout the world increased exponentially with the help of financial deregulation during the 70s and 80s as well as a surge in technological innovation. For example Ireland was directly impacted by the surge in financial flows allowing it to achieve economic prosperity for the following decades which came to be known as the 'Celtic Tiger'.1 Some Facts include...
Foreign Direct Investment is extremely important for the economy of Ireland as it is the 'backbone' of investment in Ireland. A number of factors including the low 12.5% corporate tax help to attract foreign multinationals to Ireland who then directly invest into the economy helping to support it, create domestic jobs and increase the size of the economy. For most countries FDIs are very insignificant often making up no more than 5% of their GDP but in Ireland FDIs are so significant that they make up 19.4% of the total GDP meaning that Foreign Direct Investment equates to 1/5 of all GDP within the economy overall stressing the importance of FDIs for the economy of Ireland. “What we celebrate is that we attract more foreign direct investment than anyone else in the world” |
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