However, in the long run these will have an effect on unemployment that will rise up and getting even worse. Moreover, most people are unlikely to be happy to accept higher taxes as it reduces disposable income and the level of consumption. A reduction of government spending may result in less people will support the government. Demand side policies will bring down the price level (reduce inflation), but they will result in lower national output and rise in unemployment. Therefore, government could use supply side policies to deal with the unemployment situation such as in interventionist supply-side policies will increase the levels of human capital of an economy by support education and training institutions with subsidies or tax benefits and for market-based supply-side policies will reduce trade union power.
Therefore, trade protectionism began to be applied in various countries to minimize the negative impact of international trade. Protectionism is an economic policy that limits trade between countries by imposition of tariff protection, tariff increase system and rules of various efforts to suppress imports. This protectionism, however, goes against the principle of free market. Trade barriers can be used to protect
However, as the economic, social, political situation of nations differ, they set up artificial barriers on trade to protect their own interest. These measurements include tariff barriers, import quotas or non-tariff barriers such as TBT (Technical Barriers to Trade) and SPS (Sanitary Barriers and Phytosanitary Measures. However, trade barriers are known to bring losses to consumer surplus as the trading market is artificially interrupted by government policies. Although keeping a high trade barrier
Some study that they found shows a negative impact of trade openness on market-seeking FDI inflows while the others, found that countries that more opted for international trade receive more FDI. They used total trade as a share of GDP to investigate and measure the trade openness. Thus, their finding is the trade openness positively affects FDI inflows. Countries that export more will attract more foreign inventor as there are more market opportunities for the countries and investor can do more investment to get more handsome returns. TRADE OPENNESS AND EMERGING ASIAN FDI Based on the finding of study on “Foreign Direct Investment in Emerging Asian Countries”, the FDI inflows to Indonesia, Philippines, Singapore and Thailand react positively to the degrees of openness.
Thus, economic globalization in the form of multinational corporations can prompt to exploitation of the local labor force, channeling the critical resources away from the country itself into foreign exports, and make the developing countries depend too much on developed or wealthy countries. That is why, there is some concern regarding economic globalization. Economic globalization has successfully increased the gap in wealth between developed and deveoping countries. Other than that, because developed countries’ economy have large sums of wealth available for investment in developing countries, there is concern that foreign direct investment (FDI) may create bubble markets in developing countries. As what this paper has stated before, economic globalization may result in unequal economic relations of dependency between developing and developed countries.
Some countries might increase slowly, while, some countries might increase rapidly because of globalization. Therefore, this essay will argue that globalization is beneficial for developing countries in terms of economic growth, quality of education and health care industry. To begin with, globalization is beneficial for the economy of developing countries. Many companies have started to look for outsourcing opportunities in developing countries when businesses went global because money can be saved and businesses can become more profitable. (Hill, cited in Jordan, Garland & Owusu-Nyamekye 2014, p. 91).
Dynamic effect refers to anything that can affect a country’s rate of growth over a period of time, albeit, it can slightly differ from study to study. Balassa (1961) came up with a list of dynamic effects of economic integration that have to be considered when analyzing welfare effects of integration. When countries enter into a certain kind of integration, there will be economies of scale and technological changes. This in turn widens the investment opportunity and reduces risk and uncertainty. Furthermore, integration alters the market structure of member countries and makes it more competitive, this further leads to productivity growth.
During the centuries from the Industrialize Revolution there the population size among the industrialized countries has ascended. Therefore, it is possible to restrict the argument of the EKC to more careful argument. If the population component does not exceed quickly, and if the T component decreased, these two components may be able to offset the increase in environmental influence due to an increase in the consumption of goods and services per capita, and lead to a recession in the environmental influence or even to its decline. However, if components A and P continue to rise at a steady rate, the less likely that a change in T will be strong enough to make a
It is the belief that when a country is globalized, the citizens will benefit. Citizens will have a higher living standard, better income, better jobs, better services, better goods and products. Economic globalization urges the progress of services and goods between countries. Furthermore, in recent years, developing countries are advancing on globalization. Although there are exploitations in globalization,
This is because the minority rich get richer at the expense of the majority poor who are often employed as laborers. They thus would be unable to contribute much to the economy through spending/consumption since the minority rich are in charge of the factors of production. This can be done through favorable income tax policies so as to improve economic growth. Lower income tax increases disposable income of consumers and increases consumer spending guaranteeing the population a way of contributing to the growth of the economy. The remedies available include progressive taxation where a person is taxed depending on the rate of one’s earning, meaning the high earning are taxed higher than the low-earning workers.