This article (Slight et al, 2010) considers the world economy and effects of globalization. The article states international trade is the way to exchange goods and services across countries. Increasing trading globally is one of the important factors to continue the globalization. There is a significant increase in international trade from 1900 to 1950. The global brands such as Coca-Cola, Nikkei and Mercedes are apparently located in every city around the world. Because of the global marketplace, the local companies are threatened by foreign competitors.
The article considers the negative effects of economic globalization. Some countries attempt to prevent local labors from losing their Jobs. An increasing in trade barriers leads to the decrease of the unemployment rate. Moreover, the fluctuations of exchange rate are the main factor of the level of business successful. When the exchange rate fluctuates unexpectedly, the well-planned company will be affected. In response to the information about globalizes economy, global trading is not always a negative effect on local economy.
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It is widely acknowledge that when there is an investment from foreign companies in local country, it takes advantages from local resources. However, local workers also get benefits from foreign investment. When foreign investors invest in local countries such as new firms and factories, they hire local labors to work then workers have more opportunities to get Jobs. Moreover, labors earn more income, so they and their families have better lives. In fact, foreign investment is not only beneficial for foreign investors but also local workforce. The second point is about the exchange rate fluctuation.
It can be a major effect on the equines transaction in foreign currency. When the exchange rate is fluctuated, the profit of local companies which do businesses with foreign organizations can turn to be loss. Nevertheless, there are numerous methods associated with a currency hedging. Currency hedging is the way to eliminate the risk from the exchange rate while doing an agreement to buy or sell a foreign currency on a specified date for a specified price. Therefore, the impact of currency fluctuations can be controlled by the currency hedging. Response Paper Economic Globalization By veteran