Question

Discuss about impact of globalization on trade and development.Explain the view of political economy on these impact with US and China trade war.

Answer 1

Globalization is a process of operating on an international scale. It is true that world was increasingly globalized through many trade agreements to make economic integration. Following types of economic integration helped this.

Preferential trade agreement. (Eg. India-Srilanka agreement )

Free trade area (Eg. NAFTA-North American free trade agreement)

Customs union ( Eg.South African countries customs union)

Common market (Eg. West African Common market )

economic union(Eg. European union)

Impact of globalization on trade and development. Explain the view of political economy on these impact with US and China trade war.

All over the world trade blocs are formed through integration explained above. This has made countries to take advantage of specialization and export more. It has generated more jobs. Movement of people increased all over the world. Effiiciency has improved.Technology is evolved to enhance standard of living. Financial capital moves easily and goods are traded widely.

However, this has also led to loss of infant industries in developing countries, Increasing income inequality all over the world. It has also led to some countries leading to exchange rate controls and manipulate world trade. Eg. China.

In short, globalization has led to world better off and worse off too. Those countries which could adjust with the changing conditions benefited Eg. India, South Korea and those having political-social -economic instability suffered.Eg. Iraq, Venezuela.

There is trade war currently going on between USA-China. It started with Trump govt. imposing higher tariff on Chinese goods (Eg.Steel) charging China for dumping. China also reciprocated by charging tariff on US automobiles. USA had also imposed tariff on goods coming from European Union (EU) and EU had also reciprocated. USA has also reduced work permits. There is growing resentment all over the world and this will only worsen situation if this continues as developing countries were slowly matching the growth rate and were also adapting to changing world conditions in terms of diversification and technology.

It is clear from this discussion that globalization offers opportunities but