The Age of Globalization and its Impact on Asia's Agricultural Trade : An Application of a Chain Comparative Advantage Index

Abstract

Due to timely process of WTO negotiations, unwillingness of advanced industrial countries to give concessions to developing economies regarding tariff and non-tariff barriers on agricultural commodity imports, the ongoing initiatives in Northern hemisphere to establish new and wider free trading areas which will divert trade out of the market from Asian countries, and ineffectiveness of deepening and widening existing regional trading blocs in Asia; the only promising avenue for Asian developing economies to expand agricultural trade and increase economic welfare of the majority of their population engaging in agricultural production is to resort to extensive regional integration and cooperation. <br />However, to be successful, all countries in the continent must adhere to the principle of comparative advantage as the engine of regional integration. Further, agricultural resources must be spatially allocated among local, national and regional geographic boundaries according to their natural resource endowments and comparative advantage in production and trade, so as to maximize the benefits of specialization. It is through this allocation arrangement that regional economic integration will be to the benefit of the people in Asia.