of all, what is globalization? Globalization is the process
of integrating the world economy to every corner of the globe until all
economies are interdependent. Many people envision a giant "world
economy" where each nation contributes one part. Although this can
be great in that it can eliminate tariffs (taxes on imports), and
connect the world, many experts are afraid that globalization will
marginalize smaller, poorer countries.
economists say that it is very easy for a large nation to dominate a smaller
nation. For example, many nations go to poorer countries for cheap labor
or raw materials. In contrast, wealthier nations provide manufactured
goods and services. Experts are afraid that this type of activity
exploits the less-fortunate nations, and that they will not be able to
grow and develop under globalization. Instead, they will always remain
poor while the wealthy nations just get richer.
recent research has shown that globalization may not be as harmful to
poorer nations as once thought. This is because trade
DOES help both wealthy and poor countries. We have seen how
trade is mutually beneficial in our lessons before! While trading,
poorer nations gain exposure to better technology and greater knowledge.
Because wealthy nations are investing in them, often these nations
industrialize faster. This means that there are more factories and
machines, and in turn, this creates more jobs and calls for better
educated workers. Industrialization is an effect of globalization which
helps developing nations grow and improve their standards of living. In
this way, other experts are arguing that globalization is a good thing
that the world should continue to work towards.
recent reports by the National Bureau of Economic Research, evidence
indicates that globalization is decreasing world inequality. That means
that poorer nations are catching up to wealthy nations! Although poor
nations still have a long way to go, trading with wealthy nations does
not necessarily result in exploitation. Instead, we that the trading
relationship is mutually beneficial. Not only that, when
countries trade, their sharing helps eachother. While the rich nations invest money
in the poor nations, the poor nations produce and benefit the rich
look at how what you've learned about absolute and comparative advantage
comes into play here: Most of the time, wealthy nations will have
absolute advantage in goods, but that doesn't mean that poor nations
cannot have comparative advantage! If it is relatively cheaper for
poorer nations to produce shoes, for instance, than those nations can
use shoe production to their favor. Then they can trade with wealthy
nations for manufactured goods and gain more through trade than they
could manufacture themselves. By this economic theory, it doesn't
have to be the rich nation that is always profiting. Poor nations
benefit from trade, too! With this idea, and recent research results,
many economists are now supporting these ideas.
of course, this is not to say that the issues stop here. Globalization
isn't something simple that can be resolved with such direct reasoning.
Politics, culture, psychology, etc. all come into play. Whether
globalization is totally good is still uncertain, but we have seen that
in the end, maybe all nations can benefit from it, and we
can make the world a better place for everyone.