Question

Unit Exercise 1 One argument in the debate surrounding globalization is about the inequality between developed and developing nations. Explain how reduced barriers to trade and investment might help reduce this inequality.

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Answer 1

Answer: One of the major advantages that are attributed to the globalization is of the reduction in the inequalities between the developed and the developing nation. The developing nations face problems like lack of capital and expertise that is required for taping the natural resources, building infrastructure and developing industries and sectors. With the reduction in the trade barriers and investment barriers across the nations, there will be a free flow of investment, expertise, technology and labor between the nations. As the developing nations offer a better potential for growth because of untapped opportunities, hence there will be a greater flow of investments and expertise in such nations. New companies will enter these markets and will contribute towards the economic growth of these nations. This will result in the development of economy and growth in the wealth of these nations. The people will get job opportunities and will get money in their hand. This will help in reducing the various inequalities that exist between the developed and developing nation.