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Adam Smith and Globalization: China’s Economic Evolution

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964 words
964 words
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Globalization is not a new concept – trade, migration, market integration and capital flows have been practiced in various forms dating back centuries. China is at the epicenter of our globalized world and their success is attributed to the tenets of Adam Smith’s Wealth of Nations. However, opponents of the globalization believe if Smith were alive today, he would be repulsed by our modern day international business strategies. The general consensus among dissenters of globalization is the misguided belief that capitalism at any level is missing the moral sentiment espoused by Smith’s philosophical viewpoints. Even though Adam Smith would acknowledge that some Chinese citizens are casualties of globalization, he would conclude the economic development of China’s poverty stricken society unequivocally raised their standard of living.
Adam Smith's Wealth of Nations, published coincidentally the same year as the Declaration of Independence, is considered by many economic scholars to be the early framework of capitalism. Capitalism is an economic system based on the exchange of goods and services in the marketplace. Supporters of capitalism are convinced that the economic integration of globalization is rooted in the Wealth of Nations. Adam Smith’s “invisible hand” metaphor explains how the entrepreneurial motivation of the individual, a strong workforce and a decentralized market are the driving forces for economic prosperity.
For over a decade, China’s economy has experienced some dynamic changes, especially with the transformation of their labor market. China’s entry into the World Trade Organization (WTO) in 2001 was a significant event because it symbolized to the global community their country was a competitive trading par...

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...eries Adam Smith page. Retrieved March 19, 2014, from http://www2.hn.psu.edu/faculty/jmanis/adamsmith.htm
U.S. Bureau of Labor Statistics (2013, January 7). Manufacturing in China. Retrieved March 10, 2014, from http://www.bls.gov/fls/china.htm
The World Bank Group (2014, April 17). Remarkable Declines in Global Poverty, But Major Challenges Remain. Retrieved March 17, 2014, from http://www.worldbank.org/en/news/press-release/2013/04/17/remarkable-declines-in-global-poverty-but-major-challenges-remain
Wright, N. (2009). China’s Emerging Role in Global Outsourcing | China Business Review. Retrieved March 11, 2014, from http://www.chinabusinessreview.com/chinas-emerging-role-in-global-outsourcing/
Zupan, M. A. (2011). Cato Journal - Cato Institute. Retrieved March 10, 2014, from http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2011/5/cj31n2-1.pdf

In this essay, the author

  • Argues that globalization is not a new concept — trade, migration, market integration, and capital flows have been practiced in various forms dating back centuries.
  • Explains that adam smith's wealth of nations, published coincidentally the same year as the declaration of independence, is considered by many economic scholars to be the early framework of capitalism.
  • Explains that china's entry into the world trade organization (wto) in 2001 symbolized to the global community its country was a competitive trading partner.
  • Explains that labor is one of the largest and in certain sectors the most expensive component in the production of goods. stable labor costs are important for long-term revenue projections to be relied upon by managers.
  • Opines that critics of globalization often decry the exploitation of chinese workers who are forced to endure harsh working conditions and other violations of human rights.
  • Explains that adam smith was concerned about government encroachment on private enterprise and skeptical of its role in mandating economic activities under mao's leadership in china.
  • Explains how deng xiaoping's shift to becoming a globalized nation began in the late 1990s and early 2000s. he relaxed government regulations, dismantled socialistic culture, and removed barriers to foreign investments.
  • Opines that adam smith would be pleased with the economic and societal changes that have taken place in china over the last fifteen years.
  • Explains that the china market research group published official government statistics confirming the substantial increases in chinese incomes and average standard of living.
  • Acknowledges that not every citizen of china has reaped the same benefits as their big city counterparts. however, companies have started to expand outside the metropolitan areas.
  • Opines that there is no greater mechanism for improving poor societies than that of international economic development. globalization has done more to lift millions out of poverty than the billions of dollars allocated for foreign aid.
  • Explains that china's middle-class boom - cnn money. retrieved march 3, 2014. penn state university (2005).
  • Cites the u.s. bureau of labor statistics' report, manufacturing in china, and the world bank group's article, remarkable declines in global poverty, but major challenges remain.
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