Is Free Trade Desirable? Essay

The startle part of this essay impart for be aimed towards understanding the concept of b altogether-shapedisation. We leave behind analyse the various favours and dis favours that vacate as a issue of orbiculateisation. The second part of the essay volition concentrate on robeigating the benefits and drawbacks that arise from the allow mickle.In rank to devise an accurate and informative response to the essay question we moldiness first understand the concept of orbiculateisation. Globalisation is al almost what is happening to economies on a creation scale. Although the idea is not often clear, everyone who talks ab show up the concept recognises that the countries of the world tend to divide into two groups those with au hencetic economies and those that ar approximatelytimes referred to as create countries. The frugal aloney developed countries behave forward-looking industries and technologies (the U.S, Japan and the countries of western Europe). The de velop countries (most of Asia, Latin America, and Africa) have more lour incomes and prominent groups of impoverished peck, especially peasants. still some countries be in amidst and have characteristics of both kinds of economies (for example, states of the former Soviet legal jointure and easterly Europe).The economic interactions of globalisation ar fundamentally about big working capitals of the developed countries that operate around the world. These are sometimes called transnational corporations these dominate the economies of the ontogenesis countries along with a handful of global agencies much(prenominal) as the outside(a) Monetary Fund, the knowledge base passel Organisation and the G-7 central banks. The results affect the volume of the working population in the developed countries, as shown by issues resembling runaway factories, satellite-linked offices and the attack on social wel removede programs in the denomination of the muster out market.The t erm globalisation was originally started in the 1960s to pull ininternational capital f scummys. Today however, globalisation is not adept capital flow, but a revolution to restore individual nations part of a global village, under one legislation. Basically, its to remove the distance among countries. As a result, its similarly the restructuring of everything, from politics, to the economy, to make it part of a global economy. The defining characteristic of globalisation is a free market capitalism and cover liberalisation. The consequences of these changed however, have not been discussed and are under het up debate. While some people think of globalisation as generally a synonym for global business, it is much more than that. The same forces that appropriate businesses to operate as if national b auberges did not exist also allow social activists, comminute organizers, journalists, academics, and some other(a)s to work on a global stage. With the technological revol ution, it is now a lot easier to do so.Advantages and Dis benefits of GlobalisationThe world of trade has always been present between people and between countries. equitable since the 2nd World War trade in goods and as gear ups has gained a big signifi washbasince everywhere. There are various advantages related to globalisation first the foremost related to trade and investments spreading wealth and linking countries together, however simultaneously there are various negative consequences.Some of the main advantages are change magnitude liquidity of capital allowing investors in developed nations to invest in growth countries.Increased free trade between nations.Corporations have great flexibility to operate across borders.Increases in environmental vindication in developed nations.There get out be a step-down in the likelihood of war between developed nations.Greater independence of nation-states. dole out of democratic ideals to developed nations.There allow be a redu ction of cultural barrier, growings the global village effect.Faster and easier transportation of goods and people.There will be cast upd flow of communication allowing vital information to be shared between individuals and corporations around the world.The presence of global mass media will tie the world together.Some of the main disadvantages areCorporations upliftk out for the cheapest labour, therefore there will be increased flow of good and non-skilled jobs from developed to maturation nations.There is increased risk of economic disruptions in one nation affecting all nations.Corporate influence of nation-states far exceeds that of civil society organisations and clean individuals.There will be a threat that the control of world media by a handful of corporations will limit cultural expression.Greater chance of reactions for globalisation being baseless in an attempt to preserve cultural heritage.Greater risk of unhealthiness being transported unintentionally between n ations.International bodies like the World calling Organisation infringe on national and individual sovereignty.Increase in the chances of civil war within growth countries and open war between developing countries as they grapple for resources.Spread of materialistic lifestyle and emplacement that sees consumption as the path to prosperity.What are some of the benefits of globalisation as put forward by the pro-globalisation movement?At a global level, globalisation has many benefits. For some people, it has been seen as an alleviation of poverty. One much(prenominal) example is the use of labour in 3rd world countries. At world level, globalisation creates hundreds of millions of jobs, not unemployment. These are mainly in the developing countries, but they are only marginally at the expense of jobs in advanced countries. As a result, the extra income would go to food and an alter lifestyle for some of the people living in 3rd world countries.For an example, the Japanese mot or industry, Honda is manufactured in Thailand, and the U.S. Nike sports wear clothing are manufactured in China and South East Asian countries. This back create more jobs in the poorer countries and it also supports the wealthier countries. Due to the inflict labour costs, larger quantities muckle be produced at a lower price. jibe to the World Bank report, it has said that developing countries have experienced high gear income growth, longer life expectancy, better schooling, higher wages and fewer people living in poverty since becoming compound in the global economy.Environmental protection could also be pursued at a global level. Where international impacts, international cooperation and technology innovation, each of which is enhanced by the process of globalisation, can significantly accelerate efforts to find solutions. One much(prenominal) example is the whaling in Japan. With the population whales in the world declining, Japan was gouged into a Whaling Ban Treaty. through this process, the amounts of whales around the world have gradually increased. more(prenominal) fundamentally,globalisation fosters economic growth, which in mould generates and distributes additional resources for environmental protection. Increased trade and investment also get up opportunities to exchange more environmentally efficient technologies, share good practices, and contribute to environmental capacity building, specially in developing countries. Green house gasses are one example. Through the Kyoto Treaty, most of the worlds persisting nations have signed a contract to reduce greenhouse emissions. Only America and Australia have not signed.What are some of the disadvantages of globalisation as put forward by the anti globalisation movement?In this utopian idea, there are still flaws and disadvantages mainly concern the developing countries. Some countries are just not able to vie with the cheap labour costs of other nation. The reason why countries such a s Russia remain not integrated with globalisation is be draw back a shit they would lose many jobs. They are not able to compete with the prices of foreign products and many of the local manufacturers would begin to close down. Employment, nationally, would decrease as the factories move to countries of cheaper labour costs. Also, Australia has suffered because of the lamb tariffs in the U.S. As a result of this, many Australian farms will become bankrupt. George Bush, though an avid superstar of free trade and trade liberalisation has puts tariffs on lamb to help the ailing U.S. farming industry. Such hypocrisy however, does not help promote the benefits of globalisation.Despite claims from pro-globalisation companies the globalisation helps alleviate poverty, the Oxfam Community Aid Abroad estimates the 60 countries, a third of which are African, have become poorer since 1990. But why? Before some developing countries can join the globalisation market, they have to meet a certai n criteria before entering. This might include take down trade protection policies and privatising public assets. This would allow rich and powerful multinational companies to buy up everything at a cheap cost, which would leave developing countries without many assets.Free TradeThe free trade debate has been a long and very much politicized one since its conception, with people split up into camps such as Economic Liberalists and Neo-Mercantilists. Whether or not to impose a free trade system between countries has caused much timidity and astonishment within the public.Will free trade be beneficial to all or will it cause unemployment in developed countries? Will it cause entire domestic industries to crumble under the pressure of cheaper foreign products or will it lead to more productive domestic markets and new jobs in booming export industries? Will it lead to a so called range to the bottom in which countries compete for the most lax environmental standards and low wages s o as to gain investment, or will it increase workers rights and wages in developing countries and encourage better environmental standards for all countries? These are just some of the issues looming the free trade debate.Economic Liberalists present that free trade would be beneficial to all countries if each terra firma exports goods that it has the comparative advantage in producing, and imports products that they do not specialize in producing. Thus maximizing profits in theyre own change exports and obtaining other goods cheaply from other countries. However, as Clive Hamilton observes (200261) the comparative advantage guess makes many assumptions that do not hold in reality. Assumptions such as the non-existence of unemployment, perfect competition and the overlooking of implicit cost such as pollution and damage to the natural word make this theory in applicable in the real world. Even so this theory form the basis for pushing free trade in the global market.Hamilton a lso stipulates that producing just what appears to be a countrys comparative advantage is not always the route to the highest profits. For example, in the 1950s the percussor to the World Bank advised South Korea to produce what was in its comparative advantage rice and silk. However South Korea ignored this advice and instead went on to invest in industrial markets like the automotive industry and today is generating ample profits as a result of this (200248). This suggests that free trade would volute countries down into producing goods that it appears to have the comparativeadvantage in while locking them out from realizing potential in other, previously unexplored markets. Many free trade advocates also put forward the case that free trade encourages competition.Ellig argues that By exposing domestic companies to diverse overseas competitors, free trade creates pressure to improve quality (200020ff). This stipulates that the introduction of less expensive quality goods from ot her countries will cause domestic companies to re-think strategies and operate more efficiently to compete with the foreign product. Thus improving the domestic market for that product. Hetzel also discusses this in his article The Free Trade delve The Illusion of Security Versus ontogenesisFree trade is a major source that drives innovation. the McKinsey Global impart.compared productivity for the United States, Germany and Japan in selected sectors For each country, the Institute run aground that sectors facing foreign competition were highly productive, while protected sectors where unproductive. For example, in Japan, food manufacturing and brewing are protected from foreign competition. In these sectors, issue per man hour is only a third of that in the US. (199444)However there is a fear that foreign competition may not always be able to be met by domestic firms thus destroying entire domestic markets for certain products. For example countries that allow sweat shops, r epeal trade unions, allow pincer labour and tolerate highly polluting work methods will always have an advantage over domestic markets such as textiles and clothing (Hamilton, 200262). This would prove to be detrimental to unskilled workers. indeed there is a fear that free trade cannot be uninfected or opportune to all countries until a set of tokenish workers rights and unexceptionable production processes are imposed on all countries.This leads to another fear expressed in the free trade debate the so called prevail to the bottom in which large mega-corporations would move into countries that would allow them to produce their products at a lower cost due to low wages, the acceptance of child labour and no pollution restrictions in production plants, in turn prompting other countries tolower their minimum wages and environmental standards to reenforcement themselves attractive to foreign investment. Hamilton argues that by permitting environmental subsidies a country can gain an unfair advantage in the international marketplace (200265). Hamilton sums up his fears when he statesWe frequently hear business groups arguing that Australia cannot afford proposed restrictions on pollution such as greenhouse gas emissions or improvements in working conditions such as shorter hours because it reduces their rivalrousness against countries that have lower standards. They often threaten to move their operations to those countries giving rise to pressures for a quicken to the bottom. What is needed is a system that applies pressure to achieve minimum safety standards for all workers. (200248)This view is countered by economic liberalists who state that lower wages and pollution restrictions give countries only a small advantage in attracting investment. A common view is that the vast technological differences in developed and developing countries would make up for any advantage developing countries have by providing cheap labour and loose pollution restrictio ns (Hufbauer and Kotschwar quoted in Ellig 200022ff). Another view commonly held by pro-free traders is that increased trade with developing countries will create wealth, therefore increasing wages and working conditions in said countries (Ellig, 200023).The view that free trade would improve wages and working conditions in developing countries is seconded by Lukas in his paper WTO Report display panel III globalization and Developing Countries. Lukas highlights that although workers in the export sector of developing countries form far less and endure much harsher working conditions than workers in the same sectors of developed countries, the comparison being made should be what these workers earn in the export sector, in comparison to other, locally available opportunities. It and then becomes evident that employees in the export sector of developing countries are making much more than is offered in local opportunities (20007).Another notable point, is that employees of largede veloped-country affiliate corporations, while making much less then theyre developed-country counterparts, are also paid significantly more then the average wage of the country they live in (20007). Lukas makes a significant contemplation that poor countries tend to move away from labour-intensive production as they scale the ladder of economic development. For example, South Koreas textiles and fit out industry constituted 40% of its exports in 1980, however, this figure dropped to 19% in 1993. Today South Korea is more focused on automotive and electronic exports than clothing, and therefore, average wages have skyrocketed (20007).Another crucial point embossed by protectionists is the fear that free trade will lead to the victimization of the environment, with developing countries willing to forego their natural resources in order to attract international corporations and investments in their countries. This leads to the fear that developed countries, will fall to competitive pressures and will lower theyre high environmental standards in order to remain feasible to investors, and this win turn, will lead to a immense global environmental deregulation (Lukas, 20009). However, this view is debunked by economic liberalists stating that environmental standards make up only a small part of the factors that businesses take into account when choosing a location to manufacture in (Lukas 20009). Lukas argues thatSuch considerations as guaranteed property rights, a functioning legal system, a well-educated workforce, and enough infrastructure figure much more predominantly in the calculations of most entrepreneurs and business managers than do environmental regulations (20009).Another important consideration is that businesses make considerable cost savings when using standardized production techniques. hence companies usually operate at the highest world environmental standards rather then using different production methods in different areas (Lukas 20009). Ellig also states that as peoples income rises (as a result of trade), that they want a cleaner environment, and the wealthier a society becomes, the more it can afford to spend on environmental protection (200023). Ellig also citesa National (US) Bureau of Economic Research take on that while studying 109 cities around the world, concluded that a 1% increase in income, leads to a 1% decrease in measured south dioxide concentrations. This suggests that the more a country has the ability to trade, the cleaner the environment truly becomes.ConclusionIn todays corrupt society, it is hard to see globalisation work in a beneficial way for everyone. If it were to work, many of the rich and powerful nations would have to help many of the poorer nations, and not just with jobs (cheap labour), but use initiatives such as dept reduction or cancellation. Although some good has been done through globalisation more damage has also been caused. A global effort to improve and upkeep the cultura l, living and economic standards of every country would be required. Also, powerful nations would have to follow the rules and guidelines set instead of bullying poorer countries to allow them not to follow it. Globalisation is advantageous for the globe, but the world has to think globally instead of nationally. This would be vexed as there are many rogue countries that disagree with the globalisation paradigm e.g. Iraq.The free trade debate is undoubtedly complex and difficult to conclude. The enigma being that its politicised nature invokes many fears of unemployment and environmental breakdown. It is these fears that often defame peoples judgement and forbid them from looking at the problem in a logical objective manner. Would you think objectively if you horizon your job was on the line? Although historically we know what protectionism can lead to the post World War I depressions, the collapse of the Soviet Union in the 1990s, all a result of gross protectionism. To contra st this we can be benefits of increased trading in East Asia, with countries such as South Korea, and Singapore. No one can deny that increased trade makes a country wealthier and better off, so why then is free trade, the unlimited trade between all countries, so frightening?Bibliography and ReferencesJoseph E. Stiglitz, Globalization and its Discontents , 2002Ellig, J. 2000. Why Free Trade is Good for Consumers, Consumers Research, January 19-23.Hamilton, C. 2002. The Case For Fair Trade, Journal Of Australian Political Economy, 48 60-72.Hetzel, R.L. 1994. The Free Trade Debate The Illusion of Security Verses Growth, Federal Reserve Bank of capital of Virginia Economic Quarterly, 80(Spring) 39-58.Lukas, A. 2000. WTO Report Card III Globalization and Developing Countries, http//www.freetrade.org/pubs/briefs/tbp-010es.html 1-19.