The General Agreement on Tariffs & Trade (GATT) was created in 1947 since then the world trading system has benefitted from the rounds of multilateral trade, unilateral & regional liberalization. As one of the rounds in 1994-95 also served as a mark for the establishment of the World Trade Organization to support the growth of multilateral trade agreements.
The integration of the world economy has given rise to the global standard of living which has been shared by many developing economies and as a group, these developing countries have become much more important in world trade accounting for more than 1/3 of the total estimate. Many of these countries have substantially increased exports out of which 80% are manufactured.
The progress has been impressive for countries in Asia, Latin America as are actively being participating in Global trade attracting the bulk of FDI. India and China among such countries to embrace liberalization and benefit to a large extent. On the other hand, progress has been less rapid but steady for countries in Africa & the Middle East.
For sustained economic growth, policies that make an economy open to trade & investment is always needed as no country in decades has achieved economic success in terms of standard of living without opening up to the rest of the world as doing this has also enabled many developing countries to develop a competitive advantage.
The number of people in absolute poverty declined by over 120 million in the ’90s due to early liberalization in many countries including India, Vietnam & Uganda that have witnessed faster growth & more poverty reduction as new jobs were created for unskilled workers reflecting growth resulted from trade liberalization.
These conditions have pointed towards the need to liberalize trade further as it remains significant in both industrial and developing countries, particularly in areas such as agriculture products or labor-intensive manufactures and services (e.g., construction) where developing countries have a competitive advantage.
Thus, Liberalization by both developed & developing economies is needed to realize trade potential and as a driving force to economic growth.