Globalisation's Economic Benefits

Pro globalisation
International trade and investment have been the engines of world growth over the past 50 years. The tonnes of goods traded around the world have grown by 16 times since 1950, reflecting the lowering of tariff barriers. The growth of trade in services is even greater.

The benefits of that growth have been shared. The countries that are getting poorer are those that are not open to world trade, notably many nations in Africa. China’s opening to world trade has brought it growth in income from $1460 a head in 1980 to $4120 by 1999. In 1980, American’s earned 12.5 times as much as the Chinese, per capita. By 1999, they were only earning 7.4 times as much. The gap between rich and poor is also shrinking with most nations in Asia and Latin America.

Many people believe that exports create jobs, and imports cost jobs and that it therefore makes sense to have barriers against imports. This thinking led to the Great Depression in 1930, because so many countries had erected barriers against imports that global trade fell with catastrophic consequences.

Most exports also use some imports. To take a simple example, a country might export packaged sugar, but import the packets. Lowering import barriers makes export industries even more efficient and competitive in world markets. Countries that lower trade barriers concentrate their national energies in industries they are good at, where they have an international advantage. Import barriers encourage countries to focus efforts in industries where they do not have any advantage. It leads to wasteful and lazy investment. There is evidence that developing countries that erect barriers to imports have slower growth in incomes than those that are open to trade.

Companies of all sizes are involved in world trade – the benefits do not just flow to large multi-nationals. In most trading nations, raging from Thailand to France, small firms employing less than 200 people account for between 10 and 25% of exports.

http://www.globalisationguide.org/04.html

My Comments

This article talks about the creation of jobs in the 'poor' countries through globalisation. The fact that the gap between 'poor' countries and the richer ones was increasing is something that cannot be denied. However, due to globalisation, it seems that the gap is decreasing at an increasing rate.

This is very interesting, as globalisation's advantages are at show here. Firstly, the point of protectionism is brought up here. Protectionism was a policy where the country tended to protect its own goods by imposing high taxes on outside goods. This was seen as the most profitable way to earn money by a country, as their local goods earn a lot for their economy. No money is being pumped back into any other country's economy. This theory is also shown as being a bit flawed here.

Globalisation has allowed for poor countries to close the gap between them and the bigger and richer countries. This is through the easier means of setting up a business in other countries. Smaller countries are opening up their trade, making businesses choose the logical choice in setting up their businesses at a cheaper place. Such an idea would have been preposterous in the past, however, it is very possible today due to the positive impacts of globalisation. As the saying goes, 'It's a small world after all'. With the world shrinking due to the impacts of globalisation, its becoming more and more easier to communicate with people from the other side of the world.

On the other hand, globalisation is not all about the good parts. As this link shows, China's currency, the yuan, had actually depreciated in the early days of their reform. China's progress was slow, but still substantial. China's economic growth has greatly influenced the whole world, with many trying to play catch up. The American stranglehold on international trade is being threatened to a certain extent, and this is also a major concern for the Americans. This compunds their fears that they are losing out to the Asians in many aspects of life, from their jobs to their culture.

M.Balaji

Knee-jerk reaction

Globalization is exposing social fissures between those with the education, skills, and mobility to flourish in an unfettered world market—the apparent "winners"—and those without. These apparent "losers" are increasingly anxious about their standards of living and their precarious place in an integrated world economy. The result is severe tension between the market and broad sectors of society, with governments caught in the middle. Compounding the very real problems that need to be addressed by all involved, the kneejerk rhetoric of both sides threatens to crowd out rational debate. From the United States to Europe to Asia, positions are hardening. Author Dani Rodrik brings a clear and reasoned voice to these questions.Has Globalization Gone Too Far? takes an unblinking and objective look at the benefits—and risks—of international economic integration, and criticizes mainstream economists for downplaying its dangers. It also makes a unique and persuasive case that the "winners" have as much at stake from the possible consequences of social instability as the "losers." As Rodrik points out, ". . . social disintegration is not a spectator sport—those on the sidelines also get splashed with mud from the field. Ultimately, the deepening of social fissures can harm all."

This is a book review I found online on this website . Globalisation has been a touchy subject for some, due to the harmful effects it has on the world. The places of the major players in the world are at stake, as globalisation has more or less made the playing field the same for all. This sudden change in the system is not welcome, and as seen in this review, it creates some knee jerk reactions which might be seen as aggressive. This is how globalisation has affected this world, with a sudden change, it has made the world a place where every move is being scrutinised increasingly. Globalisation has made a huge impact on this world, and it is sure to have a even more impressive effect as the days go past.

Balaji
Economic Expert

Globalisation. Economy.

Economy is one aspect of the world that is directly affected by globalisation. With technology, the world has become smaller. As the world becomes smaller and it becomes easier to communicate with one another, man-made bondaries are rendered useless. What was once top-secret is now public property. This is especially so for the economics of a country. This is clearly reflected in the outbreak of Worl War II. The spark for this war was the collapse of the stock market in America. What happened in America managed to travel across the Pacific to shock the whole world.

In this article, the matter of outsourcing of work is in focus. The pretext to this article would be the fact that with the emergece of Less Economically Developed Countries (LEDCs), low-end jobs flocked to these countries from the More Economically Developed Countries (MEDCs). There was much hullabaloo over this, as the workers in these MEDCs were left jobless. The effect of this could be seen worldwide, as relationships soured between these countries.

Now, not only are low-end jobs going to these countries with cheaper manpower, the high end ones are also going there. This is a sure way of seeing the effects of globalisation. Without the ability to communicate cross boundaries, it would not have been possible for companies to outsource their workers. Globalisation made the world smaller and companies are taking advantage of this.

Economics and globalisation are very closely linked. The effect of globalisation is very quickly observed in any economy. The works of one country, will affect another one soon, if not the next moment.

Watch this space.
M.Balaji
Economic Expert