• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Globalisation effectively aims to create a global market mechanism. Discuss.

Extracts from this document...

Introduction

Globalisation 1. Globalisation effectively aims to create a 'global market mechanism' by increasing international interdependence and integration through such means as tariff reductions and trade liberalisation. In theory, globalisation attempts to promote higher levels of equality and greater access to world markets by 'opening up' more economies, thereby creating a trading environment with an increased number of nations actively engaged in higher levels of exporting and importing. Such practices should indeed increase efficiency and create greater global market participation. However, it is manifest that commodity dependant nations (particularly developing nations) encounter difficulties when engaging in global trade with more industrially and technologically advanced economies such as America and other G7 nations. Whilst globalisation endeavours to create a situation characterised by a higher level of free trade, national interests and lobbying power within the World Trade Organisation invariably influence the level of tariff reduction by respective nations. Thus whilst globalisation does, theoretically, support actions to reduce the global gini coefficient, it is nevertheless evident that trade liberalisation and tariff reduction must be undertaken universally, with respect for developing economies, to achieve higher levels of international equity and increased efficiency. The increased push for globalisation is predominately driven by the expansion of market specialisation to gain comparative advantage in international trade, consequently increasing both efficiency and domestic activity, which invariably has a 'drip on' effect to the global economy. ...read more.

Middle

Similarly, in nations with inefficient industry and work practices, the cost of production will inevitably be higher than in developed economies (excluding wage levels, which must be looked at in relation to the cost of living with each respective nation). Thus "Many of the poorest commodity- 3. dependant developing countries would benefit greatly, in terms of overall economic growth and poverty alleviation, if they were granted better access to developed-country markets."3 Developing nations are therefore disadvantaged when competing on the international stage, for whilst G7 and other dominant economies are able to define efficiency as their target and foremost goal, many developing economies are forced to concentrate on merely producing, not promoting the best conditions of trade or efficiency. Conversely, China has developed to become a major economic power within a short period of time under the system of Special Economic Zones that are an attempt to encourage foreign investment and capital. Whilst China's economic growth has expanded significantly, it is evident that wealth is concentrated in certain areas of the country, predominately along the coast creating "narrowing income equality"4, which is becoming a major economic problem for China and many other developing economies. ...read more.

Conclusion

Also, because of the inherent nature of tariffs, which are designed to protect domestic industry, nations are tentative in undertaking significant reforms, for such actions will expose inefficient industry to competition and quite possibly result in internal redundancies. Whilst globalisation in its purest form represents the ideal of free trade globally - in a perfectly competitive market economy - national and political interest will continue to subvert the process of trade liberalisation, with established economies predominantly benefiting from the current trend and developing nations struggling to meet such high levels of output in an equitable and efficient manner. 1 ANZ Forecast for the June Quarter: www.anz.com (accessed 22/9/03, 3:30pm) 2 Marie McKee and Ken Nailon. The 2003 Study Guide to Economics Units 3 and 4, Eighth Edition. (2003) (accessed 19/9/03, 2:30pm) 3 David Gruen (Reserve Bank of Australia) and Terry O'Brien (Department of the Treasury Australia) Does Globalisation Make The World More Unequal? (2001) (accessed 18/9/03, 8:40pm) 4 David Dollar. (accessed 18/9/03, (:00pm) 5 Reserve Bank of Australia Statistics: www.rba.gov.au/Statistics (accessed 21/9/03, 4:00) (sa: seasonally adjusted) 6 ANZ Economic Outlook (accessed 22/9/03, 5:00pm) 7 www.vcta.asn.au (accessed 23/9/03, 12:30pm) 8 Australian Department of Foreign Affairs and Trade, Exploding the Myths - Facts About Trade and International Investment. (accessed 19/9/03, 2:40pm) ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Why has GDP growth been so slow in Somalia?

    At the end of 1990 the Somali state was in the final stages of complete collapse. Following the collapse of the Barre regime in 1991, various groupings of Somali factions sought to control the national territory (or portions thereof) and fought small wars with one another.

  2. Where does the World Trade Organisation fit in the overall scheme of international public ...

    One should add that this is not a new social democratic insight attributable to Messrs. Stiglitz and Rodrik; rather it is the centrepiece of classical liberal trade theory in the works of Hume and Smith. Both are more concerned with the dynamic gains arising from the mutual reinforcement of external

  1. Analyse the reasons for reducing protection and its impact on the domestic and ...

    Since embracing free trade, inefficient industries (such as our electronics manufacturing sector) have virtually died out, meaning Australia can become highly specialised in those industries which we are most competitive, such as agriculture, mining, minerals and elaborately transformed manufactures.

  2. Will trading fairly reduce world poverty?

    This may be that not much people have heard of it or that it might be more expensive than other products. This supports the last graph as 50% of the people asked buy fair-trade products to help the poor. Only a small amount of people feel that it is cheaper

  1. Globalisation of GAP

    Finding this out is crucial for the business to succeed. Even though there are negatives there are some positives all profits made in the new market go directly to the company it doesn't have to be shared, and also the company's risk is more spread out so that the company

  2. Corruption and Globalisation - Both of them have been so pervasive in recent years. ...

    It has been clear that corruption has heavy negative impact on globalisation. Benefits of globalisation are eroded by corruption. But on the other hand, does globalisation itself increases corruption? There is no clear evidence of that, however, corruption has been paid much more attention nowadays in the globalising world than in the past.

  1. Free essay

    does uk housing market warrant government intervention

    People are not going to buy or move house if they know there will be very large mortgage repayments it wouldn't make sense. Following on the from this banks are now lending more money than ever before, up to four times peoples yearly income.

  2. Comprehensive Anatomy of China

    For example, the birth of a son ensures that the family name will be carried on. Sons are also necessary to be able to fulfill the customary requirements of ancestral worship. Most importantly, men are charged with the obligation of taking care of their natural parents once old age sets in.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work