Globalization of Economy - Huang Can
Sunday, August 10, 2008
It is true that economic globalization helps to achieve prosper of economy. A country can benefit from specializing goods that it has comparative advantage and trade with other countries to import goods that cost less than producing by itself. However, the current form of global trade does not benefit all. As the rich countries such as America is much more advanced in technology as compared to those poor countries, they can profit much more by trading technology products with other countries. To the contrast, poor countries often cannot afford these products. As a result, the gap between rich and poor becomes bigger and bigger. Moreover, big countries can import goods such as cotton from poor countries at low prices, manufacture them to products and then sell them at high prices.
Besides, there are obstacles to achieve free trade and one major limitation is protectionism. Protectionists try to keep out foreign goods and they claim that this will help to
save jobs, give ailing domestic industries a chance to recover and prosper, and reduce the trade deficits
[1]. They are trying to limit the amount of importing by raising tariffs and imposing quotas. As a result, consumers have become victims of protectionism. They pay for a much higher price which might be several times the world price for foreign goods. For example, consumers in Japan pay five times the world price for rice because of import restrictions protecting Japanese farmers. European consumers pay dearly for EC restrictions on food imports and heavy taxes for domestic farm subsidies. American consumers pay six times the world price for sugar because of trade restrictions.
[2]It is a paradox that people’s standard of living seem to have improved by free trade as consumers have more choices and better access of foreign goods whereas the standard of living has lowered because prices of goods become much higher.
[1] Vincent H. Miller & James R. Elwood,
http://www.isil.org/resources/lit/free-trade-protectionism.html, ‘Free Trade Or Protectionism’, ISIL, date accessed: August 10th, 2008
[2] Vincent H. Miller & James R. Elwood,
http://www.isil.org/resources/lit/free-trade-protectionism.html, ‘Free Trade Or Protectionism’, ISIL, date accessed: August 10th, 2008