Question

In: Economics

Briefly discuss the optimistic and pessimistic view of the distributional effects on globalization.

Briefly discuss the optimistic and pessimistic view of the distributional effects on globalization.

Solutions

Expert Solution

optimistic and pessimistic view of the distributional effects on globalization.

Explanation:

Globalization refers to the integration of domestic economy with the world economy. It removes all the barriers among countries and unites the world into one market.

Economists argue about the positive and negative effects of globalization on the domestic economy as well as world economy.

The optimistic views on globalization:

  1. It provides huge market and scope to attain economies of scale.
  2. It leads to efficient use of the world resources.
  3. It helps in breaking monopolies by increasing competition which leads to increase in output and consumer surplus.
  4. It increases the growth opportunities in the under-developed and developing countries.

The pessimistic views on globalization:

  1. The crisis in one world can affect all the countries.
  2. With the trade of goods and services, diseases are also traded that can have major impact on economic and health sector in the country.
  3. In a under-developed and developing sector, globalization benefits only the skilled labor force which increases the inequality within the nation.
  4. In under-developed and developing nation due to lack of technology, the firms are not as competitive as in developed nations and thus, are forced to shut down.

With the advancement in information technology and transportation system, the distance among countries has narrowed down therefore globalization is something which every country has to accept. The countries can minimize the negative effect from globalization and maximize the positive effects of globalization to maximize the overall gain from globalization.


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