Global Economics

3145 Words7 Pages
bulb-icon

Recommended: TREORIES OF COMPARATIVE ADVANTAGEIS

1. Some economist criticized the comparative advantage principle, contending that it may have helped developed countries maintain relatively advanced technology and industry compared to developing countries. Can you explain how Trade based on Comparative Advantage could have helped maintain the income inequality among different countries globally? International trade is essential for developing countries in order to achieve sustainable growth. This flow of goods and services will significantly affect economic growth and decrease poverty. (Goldberg and Pavnick, 2007b). But poverty reduction has not been even among all of the developing countries, especially least developed countries (LDC) and the countries in sub-Saharan Africa that were not able to diversify their production and exports in order to maintain in the competition and they are facing low growth and persistent poverty. There has been reseaches done on the matter of income inequality and conflicting results has been shown. Debate is still going on that whether income inequality has been decreased or increased in the past two decades. (Sala-i-Martin (2006) and Atkinson and Brandolini, 2010) Even though this debate has been unsolved, income inequality remained high. According to figure 1 more than 80% of LDC’s population lives under $2 a day. In 2004, UNCTAD’s report demonstrated that in LDC’s with the most open and most close trade structure, incidence of poverty has been increased dramatically. On the other hand, in between, poverty has been higher in the countries that had liberalized their trade regimes in comparison to countries that liberalization was happening slowly. Six years later same study has been done by George resulted that complete liberalization cold really hurt LDCs and sub-Saharan Africa’s production and employment and it can also damage environment. Full liberalization of agriculture could lead to an increasing dependence on food imports and a rise in poverty in most places. According to Feenstra 2008, trade liberalization has a significant impact on income distribution by encouraging the adoption of skill-biased technical change in response to increased foreign competition, or to the increased globalization of production. Foreign Direct Investment (FDI) flows typically follow trade liberalization and that is why the skill differential widens. 2. Can governments shape or distort comparative advantage? Can such policies be labeled as “protectionists”? In your opinion did international trade destroy jobs in the US and reduce wages? Does Globalization affect job security? Yes they can. According to Lin in Lin article in 2009, governments are willing to help and support industries that may be profitable and efficient in the future in the “infant” phase, such as new technologies with a high potential of develop and growth.

Show More
Related

  • Wealth Inequality in the US with Sociological Viewpoints

    1100 Words  | 3 Pages

    3. What are the effects of this wealth inequality in the US and what causes it, as well as some possible solutions and their ramifications, will all be discussed and answered below. There has always been a wealth gap between the richest and poorest in society. However, in the past decade, the wealth gap between the richest and poorest citizens in the US has been growing rapidly. In the 70s and 80s, the wealth and income growth rate for both poor and rich people were similar, however, between the years 2009 and 2012 the top 1% income increased 31% while for the bottom 20%, their income actually dropped and for the vast majority of Americans, the average yearly income only increased by 0.4% [4].

    Read More

  • Economics

    596 Words  | 2 Pages

    The Island of Mocha in the video is an example of a traditional economic system evolving into a market system. Every person plays a key role in this traditional system. They had fisherman, coconut collector, melon seller, lumberman, barber, doctor, preacher, brownies seller, and a chief. The Mochans got sick of trading goods all across the island just to get the things that they want or needed. The Chief decided that they would use clam shell for currency instead of trading.

    Read More

  • Income Inequality Dbq

    662 Words  | 2 Pages

    Throughout the years, “ U.S income inequality has been increasing steadily since the 1970s and now has reached levels not seen since 1928” (Source A).

    Read More

  • Andrew Carnegie's The Gospel Of Wealth

    911 Words  | 2 Pages

    Wealth inequality did not always exist in human life. In fact, “Human life have not only been changed, but revolutionized, within the past hundred years” (Carnegie 1). There used to be

    Read More

  • The Constitution's Accommodation of Social Change

    2599 Words  | 6 Pages

    Unlike the North – a term in vogue today, among others, for highlighting the difference between the rich, industrialised nations of mostly Western Europe, North America, Australasia, and the rudimentary economies of Latin America, Asia and Africa – underdevelopment, characterised by low income levels, poverty, low living standards and other socio-economic ills seem to be a defining feature of countries in these regions, collectively described as the Global South. Thomas (2003), Hershberg and Moreno-Brid(2003), and, Solimano(2005) suggest, for instance, that the socio - economic structure of most Latin American countries remains defined by vast inequalities in income and wealth distribution, poverty, volatile growth, high mortality rate and a high level of economic vulnerability. In Asia, a number of countries including the large economies of India and China have made improvements in the 21st century in terms of reducing poverty. Yet, 22% of the developing countries in Asia live on a dollar a day . The situation is bleaker in the South and Southeast Asia region where 38% leave on less than a dollar a day and over 48% of the population living below the regions individual country poverty line . Likewise, absolute poverty is on the rise in Africa - generally recognised as the world’s richest continent in terms of natural resources - despite a recorded decline in global poverty rates (Bhattacharyya: 2005).

    Read More

  • Income Inequality in the United States

    795 Words  | 2 Pages

    The highest earning fifth of U.S. families earned 59.1% of all income, while the richest earned 88.9% of all wealth. A big gap between the rich and poor is often associated with low social mobility, which contradicts the American ideal of equal opportunity. Levels of income inequality are higher than they have been in almost a century, the top one percent has a share of the national income of over 20 percent (Wilhelm). There are a variety of factors that influence income inequality, a few of which will be discussed in this paper. Rising income inequality is caused by differences in life expectancy, rapidly increases in the incomes of the top 5 percent, social trends, and shifts in the global economy.

    Read More

  • Inequality in America

    562 Words  | 2 Pages

    In the United States there are four social classes : the upper class, the middle class, the working class, and the lower class. Of these four classes the most inequality exists between the upper class and the lower class. This inequality can be seen in the incomes that the two classes earn. During the period 1979 through the present , the growth in income has disproportionately grown.The bottom sixty percent of the US population actually saw their real income decrease in 1990 dollars. The next 20% saw medium gains. The top twenty percent saw their income increase 18%. The wealthiest one percent saw their incomes rise drastically over 80%. As reported in the 1997 Center on Budget's analysis , the wealthiest one percent of Americans ( 2.6 million people) received as much after-tax income in 1994 as the bottom 35 percent of the population combined (88 million people). But in 1977 the bottom 35 percent had about twice as much after tax income as the top one percent. These statistics further show the disproportional income growth among the social classes. The gr...

    Read More

  • Income Inequality In The United States Essay

    1035 Words  | 3 Pages

    Income inequality in the United States, as of 2007, has reached levels not seen since 1928. In 1928, the top one percent received nearly 24% of all income within the United States (Volscho & Kelly, 2012). This percentage fell to nearly nine percent in 1975, but has risen to 23.5% as of 2007 (Volscho & Kelly, 2012). Meanwhile, in 2007 (see

    Read More

  • Who Rules America: Wealth Distribution

    616 Words  | 2 Pages

    “A Guide to Statistics on Historical Trends in Income Inequality.” cbpp.org. Center on Budget and Policy Priorities, 2013. Web. 06 April. 2014. .

    Read More

  • What Is Globalization And Restrictions For Legal Immigration?

    1514 Words  | 4 Pages

    Due to the phenomenon of globalization, a substantial part of manufacturing has been moved overseas and goods are constantly being shipped all over the world. These processes are contributing to the advancement of international trade and economic improvement of many lesser developed countries. Unfortunately, globalization has also led to a significant growth of worldwide inequality. While the Western world has largely benefited from the changes, many countries in the developing world are facing great troubles adjusting to the new reality of global interconnectedness. Economic constrictions, unemployment, the weakening of government, corruption, and military conflicts are pushing people to leave their homes and seek better lives elsewhere.

    Read More

  • Income Inequality

    939 Words  | 2 Pages

    Income inequality has affected American citizens ever since the American Dream came to existence. The American Dream is centered around the concept of working hard and earning enough money to support a family, own a home, send children to college, and invest for retirement. Economic gains in income are one of the only possible ways to achieve enough wealth to fulfill the dream. Unfortunately, many people cannot achieve this dream due to low income. Income inequality refers to the uneven distribution of income and wealth between the social classes of American citizens. The United States has often experienced a rise in inequality as the rich become richer and the poor become poorer, increasing the unstable gap between the two classes. The income gap in America has been increasing steadily since the late 1970’s, and has now reached historic highs not seen since the 1920’s (Desilver). UC Berkeley economics professor, Emmanuel Saez conducted extensive research on past and present income inequality statistics and published them in his report “Striking it Richer.” Saez claims that changes in technology, tax policies, labor unions, corporate benefits, and social norms have caused income inequality. He stands to advocate a change in American economic policies that will help close this inequality gap and considers institutional and tax reforms that should be developed to counter it. Although Saez’s provides legitimate causes of income inequality, I highly disagree with the thought of making changes to end income inequality. In any diverse economic environment, income inequality will exist due to the rise of some economically successful people and the further development of factors that push people into poverty. I believe income inequality e...

    Read More

  • Globalization Pros And Cons

    1472 Words  | 3 Pages

    During this period the world trade has increased more than 300%, the world nominal gross increased by 250% and exports of goods and services increased by 340% (Gunter and van der Hoeven, 2004). These increases are mainly through the liberalization of world trade. The higher the income per country, the higher the increase of international trade (Gunter and van der Hoeven, 2004). The high income countries are mostly developing countries, because the developing countries had higher levels of protection than industrialized countries, they had a higher increase of international trade. Foreign direct investments as well as portfolio investments have decreased in low- and middle-income countries, high-income countries had a significant decrease and china and India had an increase (Gunter and van der Hoeven, 2004). The production of goods has been internationalized, such as assembling and producing products in different countries (Gunter and van der Hoeven, 2004). Opponents of globalization believe that the increase of economic drives multinationals in a “race to the bottom” to manufacture in countries with the lowest labor costs and the weakest labour standards (Gunter and Van der Hoeven, 2004). Proponents of globalization believe that if nations produce their products they are best in, will result in a more efficiency and productivity

    Read More

  • Role of Governments in Trade

    1713 Words  | 4 Pages

    In order for international trade to work well, governments must allow the world market to determine how goods are sold, manufactured and traded for all to economically prosper. While all nations may have the capability to produce any goods or services needed by their population, it is not possible for all nations to have a comparative advantage for producing a good due to natural resources of the country or other available resources needed to produce a good or service. The example of trading among states comprising the United States is an example of how free trade works best without the interve...

    Read More

  • Is Free Trade Passé?

    1831 Words  | 4 Pages

    ... true spirit of innovation. With this kind of trade, “each country continues to specialize in the production of the of its comparative advantage until its product price equalizes with that of the other [countries]” (Carbaugh, 2011, p.73) around the world. Even though strategic trade policy is not perfect, this theory best fits our current society and should be implemented the world over to create a climate of healthy competition and improved worldwide comparative advantage.

    Read More

  • Advantages And Disadvantages Of International Trade

    921 Words  | 2 Pages

    Moreover, international trade can be more effective in reducing poverty than outright aid in which trade can help any country become self-sufficient, rather than relying on foreign assistance. However, there are, many disparities within the present global trade system that work against poor countries. That is regulated by a set of rules created by governments over the years. In general, poor countries don't have access to developed countries’ markets because of the barriers of trade and agricultural. It’s difficult for poor countries, because of trade barriers, to sell their products abroad and develop their living conditions. While free trade benefits everyone, governments sometimes aim to protect their goods and markets by providing subsidies to local rules and producers, or creating barriers like tariffs and quotas. This particular practice is known as Protectionism; which can be identified as the economic policies and procedures of controlling trade between states...

    Read More

More about Global Economics

Open Document