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Overview
In general, globalization refers to a process of developing integration of economies
and societies through the cross-country flows of information, ideas, activities,
technologies, goods, services, capital, and people (Wangwe, 2013). According to Bertucci
& Alberti (2001), globalization development has steered the increment to rapidly
increasing complex interactions between societies, cultures, institutions and individuals
worldwide. Globalisation has transformed the world and national economy and had a deep
impact on the way we live and the construction industry has been part of this transformation
(Runeson & Valence, 2013). Globalization has been influence by policies that have opened
economies domestically and internationally and aid by technology which have been
dominated by new which are information and communication technology (ICT) (Wangwe,
2013). ICT is considered to be a key resource essential to achieving development goals and
has the potential to facilitate the transformation process in economies. According to
Bertucci & Alberti (2001), trade and investment liberalization, technological innovation
and the reduction of communication costs, entrepreneurship and global social networks are
four main driving forces which drive the globalization.
Overview
Free trade agreement, abbreviated from FTA, is an agreements between two or more
countries in order to reduce the trade barriers such as import quota, taxes and tariffs. It is
also can be defined as an economic theory which involves analysis and function of
importing and exporting goods without restriction between two or more counties in order
to ensure that the citizens from those countries have sufficient resources and goods thus
able to meet various level of needs and wants.
According to Ministry of International Trades and Industry (2015), Free trade
agreements are generally aimed to provide a solution to achieve faster and higher level of
liberalization that would produce effective market between the participants of free trade
agreements.
As stated by Komolavanij, Jeenanunta, Ammarapala and Chongphaisal (2008), Free
trade agreement is theoretically adapted from the Theory of Comparative Advantage which
is described by Robert Torrens in 1815 that implies the ability of a country to produce or
manufacture a particular goods at lower opportunity cost than other country.
Free trade agreement is the second degree of the preferential trading arrangement
that consist five forms which are:
1. Preferential tariff arrangement;
2. Free trade area;
3. Customs union;
4. Common market; and
5. Economic union
Thus, by adopting the free trade agreement, each participant counties is required to
remove their trade barriers among themselves.
Free trade agreement ensures the development of best economic policies to the
respective nation. For instance, companies; those who provide the consumer or their
costumers various items and good willingly to meet their demands as well as their wants.
In order to do that effectively, they will look for cheapest goods to increase supply.
Moreover it allow them to import these goods from oversea counties without any restriction
from government and taxes thus lowering the provisional cost in the domestic economic
market.