ECON401 Assign1

Assignment 1, version A

1. Consider whether the shift toward a more integrated and interdependent global economy is a good thing. Discuss the shift from the eyes of the consumer, the worker, the company, and the environmentalist.

There are many advantages of globalization. From a broad perspective, globalization creates economic activity (which stimulates economic growth), creates jobs, raises income levels and provides consumers with more choices in regard to the products and services that are available to them. From the eyes of an individual firm, globalization has the potential to increase revenues (through expanded market potential), drive down costs (through additional economies of scale) and boost profits.

There are critics that argue that globalization destroys manufacturing jobs in wealthy countries and contributes to pollution. Critics argue that falling trade barriers allow firms in industrialized countries to move their manufacturing activities offshore to countries where wage rates are much lower. Critics also argue that globalization encourages firms from advanced nations to move manufacturing facilities offshore to less developed countries to avoid the more stringent pollution controls in place in their home countries.

2. According to Joseph Stiglitz, in his video called “Making Globalization Work,” what were the original expectations about how globalization would affect global disparities, inequality and poverty? What evidence does Stiglitz offer showing those expectations were wrong?

Economic theory predicted that disparities between rich and poor would be narrowed. In fact those disparities have increased. Not only between rich and poor countries but also within most countries around the world, level of inequality has increased. Globalization has something to do with it. Globalization has not been managed well so disparity has increased. One of the reasons it has not been managed well is the lack of access to technology, knowledge resources and education that has increased the gap. International community makes rules of trade that are made mostly by advanced countries mainly for their own interest. It was also said that money should flow from rich to poor but instead it’s been in the opposite direction.

3. What is intellectual property? What key factors must be considered in designing an optimal intellectual protection regulatory regime?

Intellectual property is property that is the product of intellectual activity, such as computer software, a screenplay, a music score or the chemical formula for a new drug. Patents, copyrights and trademarks establish ownership rights over intellectual property.
Patent grants inventor of a new product or process exclusive rights for a defined period to the manufacture, use or sale of that invention. Copyrights are the exclusive legal rights of authors, composers, playwrights, artists and publishers to publish and disperse their works as they see fit. Trademarks are designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products.

Philosophy behind intellectual property law is to reward the originator of a new invention, book, musical record, clothes design, restaurant chain and the like for his or her idea and effort. Such laws stimulate innovation and creative work. They provide an incentive for people to search for novel ways of doing things and they reward creativity. Without the guarantees provided by patents, companies would be unlikely to commit themselves to extensive basic research.

4. Describe the changes in Egypt since the early 2000s. How has the global recession affected the country? How could the gap between Egypt’s rich and poor affect the country’s political economy?

Prime Minister Ahmed Nazif had implemented many economic reforms, including trade liberalization, tariff cuts, tax cuts, deregulations and changed in investment regulations. These reforms were to create a more open environment for investment. They helped Egypt’s economy grow and enabled exports to triple. However, Egypt’s wealth was covering up some problems. Inflation was still high and the global recession could cause a significant economic slowdown. The gap between Egypt’s rich and poor could create social and political unrest. The Egyptian government did a good job on the macroeconomic level but the benefits of the economic reforms did not reach the poor.