It Has Been Argued That Globalisation and Free Trade Are Responsible for Increasing Job Losses and Inequality Among All Countries in Recent Decades. Critically Discuss the Validity of This Statement in the Context of
Globalisation, also referred to as global integration is an important economic concept used to understand the economic, structural, political and cultural changes that have occurred in the world today. Globalisation is argued to have shaped the post-war world. Globalisation can be defined as the increase of interconnectedness between countries through international trade. The reduced policy barriers to trade and investment in the public sector and the reduced communication and transportation costs in the private sector are believed to be the main driving force behind globalisation (Frankel, 2006). Due to globalisation, the concept of free trade operates. Free trade is a policy where countries are able to trade freely with each other as there are no tariffs applied to imports and no quotas or subsidies applied to exports. According to the law of comparative advantage, the free trade policy allows both countries to gain mutually from trade – increasing economic growth. The increase in inequality and job losses which is occurring around the world is argued to be as a result of global logic of competitive profit-making management techniques of outsourcing and corporate migrations, atomisation, downsizing and widespread technological progress which all came about as a result of globalisation and free trade (Ukpere and Slabbert, 2007)
Due to some consequences of globalisation, movements were formed against it (Krugman et al, 2012). The anti-globalisation movements argue that although globalisation increases the overall income of a country however the benefits are not equally distributed between the citizens. This widens income disparities which brings up social and welfare issues and could also limit the forces which drive economic growth as opportunities brought about as a result of globalisation may not be fully taken advantage of. Maintaining citizens support is important in order to sustain globalisation, however support shown by citizens could largely be
Due to some consequences of globalisation, movements were formed against it (Krugman et al, 2012). The anti-globalisation movements argue that although globalisation increases the overall income of a country however the benefits are not equally distributed between the citizens. This widens income disparities which brings up social and welfare issues and could also limit the forces which drive economic growth as opportunities brought about as a result of globalisation may not be fully taken advantage of. Maintaining citizens support is important in order to sustain globalisation, however support shown by citizens could largely be
References: Alan V. Deardorff (2007). The Ricardian Model. Available at http://www-personal.umich.edu/~alandear/courses/441/handouts/Deardorff-RicardianModel.pdf. Accessed on 27/10/2012 at 18.45 Haines, W.W. (2001). “Poverty: a worldwide form of injustice”: International Journal of Social Economics, Vol. 28, pp. 861-78. Jeffrey Frankel (2006). “What Do Economists Mean by Globalization? Implications for Inflation and Monetary Policy”. Available at http://www.hks.harvard.edu/fs/jfrankel/FRB-Globalzn&InflOct4.pdf . Accessed on 27/10/2012 at 16:34 Krugman.P, Obstfeld. M, Melitz. M (2012). International Economics: Theory and Policy. 9thedition; Pearson Education Limited. Martin.H-P and Schumann. H. (1997) The Global Trap: Globalization and the Assault on Prosperity and Democracy. Subir Lall, Florence Jaumotte, Chris Papageorgiou, and Petia Topalova (2012). Globalisation and Inequality. Available at http://www.imf.org/external/pubs/ft/weo/2007/02/pdf/c4.pdf. Accessed on 27/10/2012 at 18.04 Ukpere, W.I. and Slabbert, A.D. (2007). “Is socialism actually dead and buried?” World Journal of Organisational Dynamics, Vol. 1 No. 1, pp. 3-7.