Econ Final Project

Econ Final Project - Final Final Project- Globalization...

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Final Final Project- Globalization April Rice BUS640: Managerial Economics Michael Blagg August 1, 2011 1
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Final EXECUTIVE SUMMARY International trade is a major element to the process of globalization. Governments in many countries have increasingly opened their economy to international trade. This is often done through multilateral trading system, increased regional cooperation or as part of the domestic reform programs. Globalization and trade have brought enormous benefits to many people and countries. Trade has allowed nations to benefit from specialization and economies to produce at an efficient scale. Trade has also raised productivity, supported the spread of knowledge and new technologies, and enriched the range of choices available to consumers. The key economic features of globalization constitute deeper integration in product, capital and labor markets. Globalization has caused significant structural changes in parts of the world economy. Some countries and economic sectors have been able to take advantage of these structural changes better than others. Newly industrializing economies have been among the major winners from increasing economic integration whereas in the first decades after World War II, Europe and Japan were important beneficiaries of globalization as they sought to restructure their economies. With the share of manufactured goods rising drastically, against a decline in agricultural products and non-fuel minerals, a shift in the composition of the world trade has occurred. Globalization has benefited the world economy but concern has intensified about its potentially disruptive and disadvantageous consequences. Traditional trade theory emphasizes the gains from specialization made possible by differences among countries. The main contribution of this strand of thought is that opportunities for mutually beneficial trade exist by virtue of specialization on the basis 2
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Final of relative efficiency – a country does not have to be better at producing something than its trading partners to benefit from trade. It is sufficient that it is relatively more efficient than its trading partners. This insight explains why so many more opportunities to gain from trade exist than would be the case if only absolute advantage counted. More recent theories point to other sources of gains from trade not linked to differences among countries, such as economies of scale in production, enhanced competition, access to a broader variety of goods and improved productivity. 3
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Final DEFINITION Globalization is a process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. There are many factors that have contributed to globalization such as increasingly
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Econ Final Project - Final Final Project- Globalization...

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