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A giant called globalization is knocking at my humble door

by Holler Sotomayor, Pamela

Abstract (Summary)
International trade is connecting the world’s frontiers.Economic growth is being achieved by opening up to exterior markets and many countries arenowadays unified by bilateral and multilateral agreements which enable the global market toconduct a freer trade without restrictions. Trade negotiations are supervised by the WorldTrade Organization whose intention is to eliminate the obstacles in trade between countries.The liberalization process of a freer trade has however failed in certain sectors such as in theagriculture. This sector is still highly protected in many countries and a concern in theagricultural trade is that by having a high protectionism level in the global market it couldconsequently lead to higher world prices and losses to developing countries that mainly workin rural sectors and depend on the prices of their produce.Peru is a developing country consisting of a large agricultural sector. More than half of theinhabitants are small producers with economies of scale living in extreme poverty.The country is today processing negotiations of a possible Free Trade Agreement with theUnited States. The main concern of Peru entering the agreement is how the aperture of themarket is going to affect sensible unprotected sectors of small farmers. The sensitive producecould be distortional on price and affect the farmers’ welfare because of the entrance ofsubsidized produce from the American side.The purpose of the study was to investigate the potential effects the Free Trade Agreementbetween Peru and United States could have upon the Peruvian farmers in the sector of selfsufficiency,producing any type of sensitive produce in relation to price and labour. I haveconducted the study from the farmers’ perspective.The theoretical framework was divided in two parts to be able to cover the aspect ofinternational trade and moreover the national aspect involving the system of Peru.The study was conducted interpreting a future happening and therefore the approach was thehermeneutical using an abductive research method with a qualitative strategy which enabledthe observation to be conducted through interviews. The interviews were divided in twodifferent sectors. Four semi-structured telephone interviews with the administrative sector andfive structured interviews through an intermediary in the agricultural sector where performed.My intention with the study was to interpret future happenings and not to generalize anoutcome.Furthermore the analysis was divided in four main factors based on the empirical andtheoretical observations to be able to analyze each category more deeply in an entire contextof both external and internal factors using the theoretical framework to support the argumentsof my observation.The main conclusions of the study were that the potential effects of the Peruvian farmers’ inprice and labour would not be depending solely on the price fall of the sensitive produceentering the market but on the ability of Peru to build stability within the countryimplementing internal factors lacking today. This is to prevent the external factors ofworsening the conditions of the farmers. Consequently depending on how the situation ishandled internally in the country there could be two possible outcomes, one negative effectand one positive effect.
Bibliographical Information:

Advisor:

School:Umeå universitet

School Location:Sweden

Source Type:Master's Thesis

Keywords:international trade

ISBN:

Date of Publication:06/25/2007

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