Summary22 - growth 4 What are the costs of globalization...

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CHAPTER 22 SUMMARY: 1. What is globalization? Globalization is the process of increasing interdependence among countries and their citizens. Economic globalization is the process of increasing economic interdependence among countries involving increased international trade of goods and services and the increasing cross border movements of labor and expanding financial flows. 2. Why does it occur? What were the major historic periods of globalization? Globalization occurs because the increased trade increases efficiency. Economic historian Jeffrey Williamson classifies the period 1920-1914 as the first great period of globalization and the period since World War II as the second. 3. What are the benefits of globalization? Intuitively, nations benefit from free trade by specializing in producing those products for which they enjoy a comparative advantage. This should raise growth. Free immigration increases world output. Free flows of capital allow it to flow to its highest and best use, promoting efficiency and
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Unformatted text preview: growth. 4. What are the costs of globalization? Opponents of trade argue that trade will actually promote poverty pointing to Haiti as an example. The bulk of the evidence supports the claim that trade liberalization actually promotes more rapid growth. Free immigration may cause a loss of jobs in the domestic economy due to the increased competition for jobs. Free capital flows can have negative repercussion for some nations due to over investment, as what happened to Korea Thailand and Indonesia in the 1990s. 4. How is globalization related to political systems? More open economies do not necessarily mean increased democracy worldwide. There is a wide range of opinion about what the level of government involvement should be. However, most economists believe that the allocation of resources should be left to the market by and large....
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This note was uploaded on 09/14/2009 for the course ECON 304L taught by Professor Staff during the Fall '07 term at University of Texas.

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