Question

In: Economics

Provide two examples of how foreign entanglements can benefit or hurt the global economy.

Provide two examples of how foreign entanglements can benefit or hurt the global economy.

Solutions

Expert Solution

BENEFITS OF FOREIGN DEALINGS TO GLOBAL ECONOMIES-

when there is foreign trade between two countries then it deals with goods as well as services.it may increase the overall efficiency of global economy.we can understand this concept with the help of following example-

suppose USA has efficient manpower concerned with the technical knowledge and are technically more efficient then the average manpower of India and India is having an abundance of natural resource which can be converted into quality product with the help of technical knowledge.

Now suppose USA allowed the person of USA to work in India for some time and the people who went India trained the labor forces in India and now India is also having technology efficient labor force and there would be supply of better quality product in all over the world.in this way this dealing has benefited the global economy.

DISADVANTAGES OF FOREIGN DEALINGS TO GLOBAL ECONOMIES-

when one country manipulates the growth of another country then it makes an adverse impact on the global economy.we can understand this following example-

by taking the previous example which was-

suppose USA has efficient manpower concerned with the technical knowledge and are technically more efficient then the average manpower of India and India is having an abundance of natural resource which can be converted into quality product with the help of technical knowledge.

but now instead of providing technical knowledge to India,USA is providing cheaper goods to India and India is completely depending on USA.in this way there is less supply of quality goods and more demand and then USA is able to manipulate the prices in the global economy.USA has dumped the Indian economy and India is unaware about the capable economic growth.it would never be able to utilize its natural resources which could have benefited the global economy.


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