Analyze how globalization has impacted political and economic systems Essay

Analyze how globalization has impacted political and economic systems and appreciate America's role within global, political, - Essay Example North American Free Trade Agreement (NAFTA), South Asian Free Trade Area (SAFTA), Association of South East Asian Nations (ASEAN) etc are some of the regional trade blocs formed to exploit the opportunities of globalization. This paper focuses more on the North American Free Trade Agreement (NAFTA) and South Asian Free Trade Area (SAFTA) to analyze the impacts of these trade blocs on globalization. Impacts of globalization on political and economic systems The history and formation of the trade bloc Since the mid-1980s there has been a profound change in the structure of the international economy due to the widespread growth and internal enhancement of regional trading blocs in all parts of the globe. The World Trade Organization (WTO), for example, notes that almost all of its 134 members are signatories to regional trade agreements with other countries. As of February 1999 the GATT/WTO has been notified of 184 regional trade agreements of which 109 are currently in effect. These re gional trade groups, according to Fred Bergsten of the Institute for International Economics, account for approximately 60 percent of world trade. The United States, Mexico, and Canada created a free-trade area (NAFTA) that became effective in January 1994 (Reardon et al, 2002) NAFTA has proposals to expand the size of this trade bloc to the entire American continent. Same way, Agreement on South Asian Free Trade Area (SAFTA) was formed on January 6, 2004 at Islamabad, Pakistan during the 12th SAARC summit. The members of this trade bloc are Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. The role that the countries involved in the trade bloc play in the global economy â€Å"Regional trade blocs have the effect of lessening trade restrictions between members, while increasing or standardizing trade restrictions for non-members. In terms of worldwide trade, the net effect is arguable† (Reardon et al, 2002). One of the major barriers in increasing trade acti vities between different countries before the entry of globalization was the governmental trade restrictions imposed by countries. Globalization has brought the concept of free trade between countries and many of the countries which implemented globalization started liberalize the governmental restrictions on trade activities between countries. American economy has the ability to affect the entire global economy. Any fluctuations taking place in American economy is watched with lot of concerns by other countries because of the increasing interdependence of global economy and the trade activities many of the global countries have with America. However, most of these liberalizations of trade rules between countries were taken place between countries which have warm relationships. Countries in the same region with political and economic problems between them have failed to liberalize trade rules. Such problems created more problems to other countries also in doing free trade activities . For example, India and Pakistan are enemy countries and their enmity created problems in signing an agreement between Iran and India in establishing a gas pipe line from Iran to India through Pakistan. However, the formation of SAFTA helped these enemy countries to assemble under one umbrella and currently the problems in establishing the gas line is going to be solved amicably. In short, countries started to realize that the