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Disadvantages of globalization
Disadvantages of globalization
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1.1.1 Regional Economic Integration and Ethiopian Economy
It has elapsed decades since economic cooperation and grouping among countries got paramount attention. We can observe different experience of economic integration in every corner of the world. Africa, Latin America, the Caribbean, Europe and Asia all have tasted either the pains or the pleasures of economic integration. The globe has experienced a large number of economic groupings among nations. Mostly the objective of such groupings is either political or economic motives. It is this practice of regional cooperation to day shifting towards globalization.
Countries in the world in general and the developing nations in particular have followed different global economic policies to
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Theoretically, the aim of regional economic integration is to appreciate member countries’ incremental trade possibilities that may be generated by elimination or reduction obstructions to trade and investment (both tariff and non-tariff barriers), encouragement and facilitation of such trade via harmonization of their trade-related regulatory systems, and coordination of compatible macroeconomic policies. It is argued that the possible economic gains for regional integration arrangements include trade creation, increased efficiency of production through increased specialization, increased domestic production, enhancement of product quality, inward investment and transfer of new technologies, and improved domestic terms of trade. Such benefits can be attained through the combined size of their collective productive capacities and markets and the sectoral complementarities that may exist among them. For regional economic integration to be beneficial to all concerned, the benefits of integration must exceed the costs associated with the exercise of integration (Sunny et al, …show more content…
COMESA is a regional integration bloc comprising 19 member states of Eastern and Southern Africa. As it is indicated in the treaty, COMESA envisions a fully integrated, internationally competitive regional economic community; a community within which there is economic prosperity as evidenced by high standard of living for its people. In order to achieve its mission, COMESA has to pass through achieving zero tariffs for all tradable goods among member countries; hence, it has established a Free Trade Area (FTA) in October 2000 and it plans to introduce the Common External Tariff (CET) or the customs union by the year 2004 and establish the economic community by the year 2025. (COMESA,
Economic integration is the joining of economic policies between different states/regions. This eliminates tariff and non-tariff barriers to the flow of goods, services and factors of production between the regions. Economic integration has varying levels referred to as trading blocs; these are a form economic integration. A trading bloc is a group of nations that have been made a bilateral or multilateral agreement. There are four types of trading blocs. The least advanced level is the Free Trade Area. The features of this level is that reduced tariff barriers between signatories, which at times are abandoned altogether and there is free movement of labour and capital and the non-member countries have an independent set of tariffs against member countries. The second level of economic integration is the Customs Union. This is a Free Trade Agreement plus a common external tariff. Member countries agree to reduce tariff barriers among themselves and they have in common, this is referred to as tax harmonisation. The Common Market is the third level of trade blocs. This has features of the Customs Union plus free movement of capital and labour and some policy harmonisation such as similar trade policies to prevent certain member countries having an unfair advantage. The European Union is an example of a Common Market and is an economic and political partnership that involves 28 European countries. It allows goods and people to be moved around and has its own currency, the euro, which is used by nineteen of the member countries (The UK excluded). It also has its own parliament and sets rules in a wide range of areas such as transport,...
CETA, as a trading pact between European Union and Canada is expected to open the markets between North America and Europe. This opening is expected to lower the costs and improve the import of European products in Canada (Chong, 2013). Such lowering of the costs will benefit the citizens who will pay less for products, therefore also fewer taxes (Johnson, 2013, p. 560). Moreover the trade would cause economic growth and creation of more jobs for the Canadian citizens (Chong, 2013). Nearly 80, 000 new work places will be created, thus bringing additional 12 billion dollars to the federal economy (Chong, 2013).
The trend toward a more globalized market has become increasingly developed in the latter half of the 20th century. Emphasis on world trade has become a dominant figure in almost every Nation’s economy. Between 1970 and 2000 world trade has experienced an increase of almost 370 percent. Concurrently, world GDP increased by 150 percent. Trade is beneficial to Nations because it allows the creation of avenues that aid in efficient allocation of resources (Canas & Coronado). Countries can gain from trade when they specialize according to their comparative advantage. This is, when they create conditions where goods and services can be produced at a lower opportunity cost than in any other country. Along the same logic, countries can also make large profits by taking advantage of another countries comparative advantage.
The Demographic Profile of the Country Ethiopia is located in the north-eastern portion of Africa. It is a landlocked country, commonly known as the Horn of Africa. The country is split diagonally by the Great Rift Valley. The western highlands get the most precipitation, while the lowlands and eastern highlands are arid. Ethiopia has three different climate zones that change with elevation:
Much of the political case for regional economic integration stems from national security. Another case study provided by Hill is the European Union. The nation states of Western Europe bonded together in an effort to deal with the political giants of the USSR to the east and the USA to the west. Further, regional economic integration can facilitate political harmony between nations due to their increased level of
These “Inner Six” nations thus laid the framework for further integration of other nations within the region and its supranational principles were what led to the creation of the European Economic Community in 1957, further assimilating the European countries’ economies. The creations of these communities for economic purposes were meant to promote cooperation amongst European nations to prevent the further outbreak of violence which had subsided with the end of WWII. Through these general agreements of economic importance came further integration through the creation of more agreements throughout the 1960s, such as the abolishment of customs duties amongst their borders, creating free trade and border trade tax pacts among the Inner Six and across their borders to other signatory nations.
The political force moved away from the painstakingly and time-consuming technique of multilateral tariff negotiations to smaller regional and bilateral provisions - the Regional Trade Agreement. In these arrangements; members accord preferential treatment , basically agreeing to liberalize the exchange of goods and services amongst each another giving regard to certain trade barriers. RTA is not the first-hand way of trade liberalization though. Initially, when multilateral trade discussions used to happen, two-sided and multiparty FTA”s filled the vacuum. There were restrictions from stringent and premeditated trade arrangements earlier, thus a lot of states are now moving towards freer trade for their own benefits.
Few governments will argue that the exchange of goods and services across international borders is a bad thing. However, the degree to which an international trading system is open may come into contest with a state’s ability to protect its interests. Free trade is often portrayed in a good light, with focus placed on the material benefits. Theoretically, free trade enables a distribution of resources across state lines. A country’s workforce may become more productive as it specializes in products that it has a comparative advantage. Free trade minimizes the chance that a market will have a surplus of one product and not enough of another. Arguably, comparative specialization leads to efficiency and growth.
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...
Firstly, what should be noted here is that international trade has been providing different benefits for firms as they may expand in different new markets and raise productivity by adopting different approaches. Given that nowadays marketplace is more dynamic and characterized by an interdependent economy, the volume of international trade has grown substantially in recent years, reducing the barriers to international trade. However, after experiencing the economic crisis that took its toll in 2008 many countries adopted a different approach in terms of trade barriers by introducing higher tariffs in order to protect domestic firms from foreign competition (Hill). Secondly, in order to better understand the implications of the political arguments for trade it is essential to highlight the main instruments of trade policy (See appendix 1).
An outstanding mechanism frequently used to interpret ‘Globalization’ is the ‘World Economy’. Back to the colonial age, the coinstantaneous behaviors of worldwide capitals and energy resources flowed from colonies to western countries has been regarded as the rudiment of the economic geography (Jürgen and Niles, 2005). Nowadays, the global economy was dominated by transnational corporations and banking institutions mostly located in developed countries. However, it is apparently that countries with higher level of comprehensive national strength are eager for a bigger market to dump surplus domestic produce and allocate energy resources in a global scale, thus leads to a world economic integration. This module was supported by several historical globalists (Paul Hirst, Grahame Thompson and Deepak Nayyer) ‘their position is that globalization is nothing new but more fashionable and exaggerate, a tremendous amount of internationalization of money and trade in earlier periods is hardly less than today.’ (Frans J Schuurman 2001:64).
Trade creation occurs when low cost producers within free trade area replace high cost domestic producers. These agreements create more opportunities for countries to trade with one another by removing the trade barriers and investment. Trade creation allows member countries for a wider selection of goods and services not previously available. They can acquire goods and services at a lower cost after trade barriers due to lowered tariffs or removal of tariffs which will encourage more trade between member countries the balance of money spend from cheaper goods and services, can be used to buy more products and services. Regional economic integration significantly contributes to the relatively high growth rates in the nation. By removing trade barriers between members countries the factor of production can be move
The case for regional integration is both simple and irrefutable. First we are small and we need to achieve economies of scale. We need to achieve such economies in markets, production, the mobilisation of regional capital for regional use, university education, science and technology, sea and air transport to mention some areas.
...eve economic endeavour. They mostly put emphasis on areas such as water and hydro-electricity (). These initiatives led to the belief that a free trade protocol (FTP) removing trade barriers would facilitate the access to individual markets by the other states (). The said Protocol was signed in Maseru (Lesotho), in August 1996 and envisioned the creation of a Free Trade Area by 2004 thus cancelling tariff barriers and easing the emergence of multilateral trading partnership, with the objective of creating a fully integrated regional (SADC) market (). However, because of its lack of clarity on the regulations, the protocol has proved inefficient and an issue became obvious for everyone to see: countries such as SA preferred to both establish regional multilateral and re-negotiate and agree bilateral agreements that would suit its policies with individual states ().
Regional integration is the process by which two or more states agree to cooperate closely together to achieve peace, stability and wealth. Usually, integration involves one or more written agreements that describe the area of cooperation in detail, as well as some coordinating bodies representing the countries involved.