In: Economics
Using examples, discuss and illustrate the arguments supporting and opposing globalization of trade and investment
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.