The Benefits and Drawbacks of Globalization

"Globalization can be defined as the ability to produce and good or service anywhere in the world using capital, technology and components from anywhere and to sell the output anywhere and place the profits anywhere" - - Peter Jay, BBC Economics Corrospondent, 1996

"Rather than lead to economic benefits for all people, economic globalization has brought the planet to the brink of environmental catastrophe, social unrest that is unprecedented, economies of most countries in shambles, an increase in poverty, hunger, landlessness, migration and social dislocation. The experiment may now be called a failure." The International Forum on Globalization (IFG) here outlines the economic and social problems of which they accuse increased globalization of being the primary cause. Peter Jay outlines in his definition the areas that globalization impacts and this essay will proceed to attempt to evaluate the affect of this impact on two main areas. Firstly the economic consequences of increased trade liberalization will be examined in terms of effects on domestic and international markets, and secondly the impact will be examines in terms of affect on social issues such as inequality, poverty eradication and economic growth. These areas are commonly accepted as the most pressing global problems, and it follows that it should be the objective of any internationally endorsed economic system, to resolve these problems.

The anti-globalization war is primarily being fought by international NGO's concerned by the alarming prevalence of poverty and inequality in the world of today, and the perceived failure of globalization to resolve these, as they appear to be worsening as a result of increased international trade liberalizations. In 19...

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...sed free trade is solid and data tends to validate its claims. Its weakness lies however in it's assumptions that must be taken into account before trade liberalization is pursued. Primarily, it should be assured that an adequate infrastructure is in place to facilitate the market force, along with a stable macroeconomic fiscal and monetary policy. When possible however, liberalization should be pursued as it does provide excellent opportunities for economic growth through larger markets and increased availability of needed imports. The opening stages should however be administered carefully, as initial unemployment and output drops are likely to ensue from the period of reallocation as dictated by the theory of comparative advantage. These are however short-term losses, and will remain small when compared to the long-term gains of increased international trade.