Economics of Globalization Assignment

Economics of Globalization Assignment Words: 987

Globalization refers to the increasingly global relationships of culture, people, and economic activities. It is generally used to refer to economic globalization. In this research report am going to focus on effects of globalization on the economy. At the same time industrialized countries were rich in raw materials but they needed to convert the raw materials to a finished product which was difficult for them to do so.

These needs of people led them towards globalization which had solutions for these problems. Economic Globalization The Advantage Of Economic Globalization the world economy “The global distribution of production of goods and services, through reduction barriers to international trade such as tariffs, export fees, and import quotas and the restrictions movement capital and investment. May contribute to economic growth in developed and developing countries through increased specialization and principle comparative advantage.

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The term can also refer to the transnational circulation of ideas, languages, and popular culture. ” (1 ) What really change the world towards the globalization specially In economic sector is the industrialization of the developed and developing countries. It started from early 18th century when industrialized countries found shortfall of raw materials for the production of goods. In order to fulfill the needs of their domestic customers they had to find a way to solve this problems. “Increased trade led to an ever increasing network interdependency in the countries of the world.

When Britain looked to other countries to satisfy their demand for coal, those countries began to rely on the revenues they could gain by exporting coal. Those countries, in turn, could use hose revenues to buy British goods or import raw materials that they need for their own industrialization. ” (2) As countries traded with each other more consistently and more extensively, they stopped producing the things they could import more ache ply concentrated on producing the things they fabricate well.

In time, individual countries lost their abilities to produce certain goods completely, relying on other countries exclusively to meet that demand. That process of specialization also had an important effect on the raw materials were produced. As countries specialized, they that they actually produced more value of goods than they had when they produced many different types goods. Specialization also meant countries known to be particularly skilled at producing one or two products became world leaders in the manufacture of those products.

As other countries wanted to branch out into producing and producing those goods, they could use the tech oenology expertise developed by country to help them. Even relatively underdeveloped countries often found at least one important commodity they could offer the world. This connected them to the world economy and pulled them away from us bioscience agriculture. As trade between far-flung parts of the world produced a global economy, ideas and technology were exported just as easily as raw materials.

As countries had more and more contact with each other, they shared their cultures including their political philosophy. This is how Smith and Marx came to be read all over the world. Globalization meant that people could no longer think only in terms of their local area, they had to consider the outside world as well. Some areas were more receptive to new ideas, but no area could shut out new ideas completely. Because of globalization, most of the entries of the world no longer concentrated on local markets. Their focus became on regional or even world markets.

It also changed the way produced goods domesticity including which goods they produced at all. Just because a country might have the resources and ability to produce a particular commodity no longer would necessarily produce it. If someone else in the world could produce it more cheaply and with a higher quality, they mightiest concentrate on what they were better at producing. Open Market ” The economic case for an open trading system based on multilaterally agreed rules is simple enough and rests argyle on commercial common sense.

But it is also supported by evidence: the experience of world trade and economic growth since the Second World War. Tariffs on industrial products have fallen steeply and now average less than 5% in industrial countries. During the first 25 years after the war, world economic growth averaged about 5% per year, a high rate that was partly the result of lower trade barriers. World trade grew even faster, averaging about 8% during the period. “(3) Absolute Advantage ” This is arguably the single most powerful insight into economics.

Suppose country A is better Han country B at making automobiles, and country B is better than country A at making bread. It is obvious (the academics would sartorial”) that both would benefit if A specialized in automobiles, B specialized in bread and they traded their products. That case absolute advantage. But what if a country is bad at making everything? Will trade drive all producers out Of business? The answer, according to Richard, is no. The reason is the principle of advantage. It says, countries A and B still stand to benefit from trading with each other even if A is better than B at making everything.

If A is much more superior at making automobiles and only slightly superior at making bread, then A should still invest resources in what it does best-?? producing automobiles -?? and export (1950 – 100. Trade and GAP: log scale) the product to B. B should still invest in what it does best-?? making bread and export that product to A, even if it is not as efficient as A. Both would still benefit from the trade. A country does not have to be best at anything to gain trade. Advantage. The theory dates back to classical economist David Richard. It is one of the most widely accepted among economists.

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