Cobden was a strong advocate of free trade he

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Unformatted text preview: ho was a prominent nineteenth century politician. Click on “Cobden” and read about his life. Cobden was a strong advocate of free trade. He believed that international trade was necessary between major powers if war was to be avoided. If he were alive today, no doubt he would strongly support economic globalization efforts. T These U.S. consumers are shopping for cameras made by a Japanese company. How might this scene represent the hidden benefits of globalization? 50 the proponents of globalization often argue that the critics overestimate the influence and reach of large transnational companies. For example, in 2000, the top 100 transnational companies produced only 4.3 percent of the entire world’s output, which is about as much as one country, the United Kingdom, produced in 2000. Chapter 2 Economic Systems and the Global Economy To a large degree, whether one supports or criticizes globalization seems to depend on where “one is sitting.” Globalization doesn’t affect everyone in the same way, and often how it affects you determines how you feel about it. EXAMPLE: Suppose Sanders, an American worker residing in New York, loses his job to an Indian worker in New Delhi, India, who will do Sanders’s job for less pay. In this case Sanders incurs real costs, but what about Sanders’s company, and the company’s customers? For the company, this change means lower costs and higher profits. For the company’s customers, prices for the company’s products may go down. So, in this case Sanders is probably a strong opponent of offshoring, while his company and its customers are probably supporters. When it comes to globalization, it is often much more difficult to see the benefits than it is to see the costs. For example, the supporters of globalization argue that it brings greater economic wealth, lower prices, more innovation, and less poverty. Yet, sometimes it is difficult for us to see all these benefits. When you buy cheaper goods or different goods because of globalization, you probably never say,“Wow, I can’t believe all the benefits I get from globalization!” In fact, you might not even connect the lower-priced goods with globalization at all. The benefits of globalization tend to be difficult to see, partly because they are so widely dispersed. The costs of globalization, in contrast, are more visible, often because they are so concentrated. A person who loses a job because of freer international trade in the world knows exactly what is to blame for the predicament he or she is in. This person surely could receive some benefits from globalization (in the role of a consumer), but this person also could, for a time, incur some rather high costs from globalization (as an unemployed worker). It is likely that this person will know of the costs but be unaware of the benefits. 02 (030-053) EMC Chap 02 11/17/05 4:14 PM Page 51 This new IKEA store opened in Russia in September of 2005. How does a Swedish retailer opening a store in Russia reflect the recent trend toward globalization? A Fad o...
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This document was uploaded on 01/16/2014.

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