Question

To what extent does dependency theory explain inequality in the world today?(2000 Words)

Answer 1

Based on dependence theory, politics and economics are related and interdependent and exhibit high correlation and many countries interact with each kther leaving some countries in isolation.

This has created inequality to large extent.

US and China have dominated world trade and subsequently their trade deficit has widening which triggered tarriff wars. Both President Xi Jinping and Donald Trump being politically autocratic have not refrained and based on dependence theory we see the economic growth of both nations is linked to political vendettas.

The Trump administration brought high growth and high asset prices and also escalated the tariff war which made US curb imports and bring robustness to economy.

The biggest issue been surfaced is US China Trade War, Immigration Laws, US National Debt, Foreign Relations policy  

US and china have great history of trade wars however recent times has been largely due to sanctions been imposed on china by USA.

Recently, USA slpped tarrifs on 40% of chinese goods. which has caused prices of US goods to go up substantially becuase cheap imports fro china have been stopped.USA has also stopped cheap imports of steel and as a result Chinese government too has imposed substantial tarrifs on USA goods.

As a result, there has been currency devaluation in China to make it goods look more cheaper and attractive and has started selling Goods in emerging markets. US goods however have become more costlier and hence sales have decreased.

Chinese government has aggravated trade war by imposing fresh round of tarrifs , however before G20 summit which will be held in 2018, such issues will be resolved.

Since, China has imposed tarrifs we see there has been lack of entry of chinese workrs and visas in USA which has nullified the clear cut winner. Because of trade war, India has managed to export steel and aluminium to US markets and hence has been the greatest beneficiary.

Given the Presidential Power following economic strategies need best case implementation :

Resolution of NAFTA deal with negotiation as well as maintenance of great relationships with South Korea on denuclearization by maintaining an eye on all developments
US China pact and removal of tarriffsby signing of MOU and economic cooperation
Immigration laws been relaxed by allowing H1B for Indians who look to create startups IN UsA and generate more employment
Debt refinancing and additional taxation on corporates with large market Capitalization to decrease debt in short term.
Increasing interest rates to appreciate dollar and control inflation and money supply in market  

References:

Bailey, Martin Neil, What Happened to The Great American Job Machine!? The impact of trade and electronic Offshoring.

Cline, William R 2004. Trade policy and Global Poverty. Washington : Institute for International economics

Goldman Sachs, 2003. Dreaming with BRICS: the path to 2050. Goldman Sachs Global Economics paper 99

Zoelick, Robert B 2001. American Trade Leadership : What is at Stake? Speech before Institute of International Economics washing mton, September 24.

Schott, Jeffrey, 2004. Free trade agreements :US strategy and Priorities. Washington: Institute for International economics  

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