Powerful states exploit weaker states, and “free trade” exacerbates the problem. I will first discuss why free trade does not work. Then, I will explain how the current system enables the inherent protectionist attitude of states. Finally, I will analyze the fairness of the system. Free Trade Doesn’t Work As Ian Fletcher pointed out in Free Trade Doesn’t Work: What Should Replace it And Why, nations need a well-chosen balance between openness and closure toward the larger world economy (Fletc... ... middle of paper ... ...his sense, exploited by stronger nations.
Proponents also believe that globalization will stimulate the spread of democracy and in turn improve the condition of human rights so intrinsic to the values of democracy. Critics of globalization see globalization quite differently, portraying it as worldwide push toward a globalized economic system under the control of global corporate trade and banking institutions that are not responsible to the democratic system or governments. Many questions surround globalization. What are the costs and benefits of free trade? Does globalization exacerbate global inequality?
Mergers in the World Economy . "Monopoly is a great enemy to good management which can never be universally established but in consequence of that free and universal competition which forces every body to have recourse to it for the sake of self-defense" (Smith, 1776: 63). Adam Smith found that monopolies were a negative aspect for an economy therefore supporting competition among firms in order to protect one’s firm. Competition policy affects the nature of firms and policy makers in today’s global economy. Competition policy effects the world economy in many ways and with its increase in importance there must be an international agreement on competition policy.
This allows domestic governments to hold on to some authority over trade alongside policy-making space. Free-market trade going unchecked through hyper globalization would present a problem because people undermine the regulations that citizens are so used to being protected by. This would lead to a problem concerning legitimacy. One solution would be to impose a set of regulations among all countries, but that would be advantageous to some and disadvantageous to others, making it an unfair solution. Creating policy-making space provides governments with some ability to keep trade legitimate as globalization expands.
This opportunity allows ... ... middle of paper ... ... of remaining fair with a collection of antitrust laws. The laws ensure that there is not monopolization of products, price fixing to destroy competitors and over charging the consumer. The open market is filled with such competition that producers are unable to compete in the market against the larger companies and develop countries. Laws have been enacted to protect the small producers and the consumers from harm. To fix this dilemma, we must provide equal opportunity in the open markets.
This week I have chosen to focus my portfolio on Daly’s article on ‘The Perils of Free Trade’. I will seek to analyse whether ‘Free Trade’ is in fact inherently disadvantageous as this article would suggest and weigh up whether it is effective. So, what is free trade? It has been stated by many that Free Trade is actually no more than a theory. The theory is that the most efficient allocation of means, globally, would be attained if administrations were to stay out of trade and If administrations did not interfere, by using tariffs, subsidies, or regulations to increase the price of goods paid by their consumers for things made in other countries, the result would be what economists describe as "Pareto efficient" Some economists believe that free trade is the best practical guide we have to policy and if in doubt, liberalise, even if no other government is doing the same.
Whether globalization is a force of good or evil has become a highly contested issue throughout the world. The proliferation of economic globalization has been advocated for with the claim that a greater socioeconomic integration and collaboration among countries will increase the living standards of both the rich and the poor. However, as Stiglitz indicates in the book Making Globalization Work, while it is true that globalization has enormous potential to make the world a better place, what is problematic is the amalgam between politics and economics that has shaped globalization resulting many losers and few winners. This paper will aim to show that on the one hand economic and corporate globalization are not the great evil portrayed by Wayne Ellwood in The No-Nonsense Guide to Gobalization, but neither can globalization and free trade be equated with increased living standards for all. Instead, the potential of globalization must be acknowledged, though one must take into account the negative impact it has had on the world and look for ways in which it can be improved as argued by Joseph Stiglitz.
However, the new theory of international trade is driven by increasing returns to scale, also known as economies of scale, and leads to imperfect competition (Carbaugh, 2011). Furthermore, this new trade theory fosters the idea that the government could work in the interest of its nation to improve market outcomes, the antithesis of free trade. Krugman’s article presents two arguments that challenge the assumptions of classical trade optimism and support the case for government intervention. However, the implementation of government intervention in international trade may create excessive obstacles and in the end, free trade may be more practical. Economists generally believe that international trade can improve the standard of living of the trading countries (Wheelan, 2010).
Tariffs don’t bring any benefits to the countries that they impose them, and for this reason they won’t help in realization of globalization. With tariffs reduction and the enhancement of globalization the consumers will have more choice on products and wider price range for the products. This is because reduction in tariffs results in reduction in trade barriers which is expected to expand the global economy. The elimination of tariffs will make the businesses to export freely and import freely, there will be an increase in the quality of goods and services that are produced in... ... middle of paper ... ...t have merged together, the fixed costs are distributed over a large volume of production causing the unit cost of production of the firms to decline to big levels (Ghose, 2003: 29 paragraph: 4). After the firms have engaged themselves with merging and acquisition due to globalization there are other benefits that may arise.
I believe that globalization, rather then harming the nation state is actually facilitating it; the existence of domestic associations can reject or accept any notion of globalization. Globalization has surely made an impact to both developing and developed nations, only causing them to adapt to these circumstances. In “The political economy of Globalization”, Layna Mosely exemplifies the various change and influences made by globalization. Globalization has lifted political boundaries; this is a result of “deliberate decisions by poli... ... middle of paper ... ...balization increases political associations among a wide mixture of corporations and nations. Mosely and Klien discuss the repercussions of globalization and its influence on the nation state; they figuratively agree on the pressure it inflicts.