Question

In: Economics

Using examples, discuss and illustrate the arguments supporting and opposing globalization of trade and investment

Using examples, discuss and illustrate the arguments supporting and opposing globalization of trade and investment

Solutions

Expert Solution

The first argument supporting globalization of trade and investment is that it brings economic efficiency and economies to focus upon their own comparative advantage and productivity level increases. For example, the USA produced technology enables products and china produced low cost manufacturing goods due to the abundance of low cost labor. It is only possible when both the economies focus upon their own comparative advantages. The second supporting argument is it increases economic cooperation and free trade zones where resources are shared and resources complement each other. For example, the free trade zones such as European Union, NAFTA,   and SAFTA bring the economic cooperation and movement of labor also takes place. So, it supports the economies of different nations in international trade. The third supporting argument is the increase in GDP and creation of new jobs. For example, FDIs taking place in countries like China by companies such as Apple and Nokia, created jobs in the country and boosted the economy.
There are few arguments opposing the globalization of trade and investment. The first opposing argument is the reduction in jobs and shifting it to the other nations having cheap labor and government incentives. For example, jobs are shifting from the USA to the countries like India, China and Philippines. The second opposing argument is the destruction of domestic industries by dumping of goods. For example, China produces goods at lower cost and tries to dump it to the other nations such as India so capture the market. Besides, in the name of international trade, MNCs take undue advantage and offer highly priced and poor quality products in the poor developing nations.


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