Examples Of Economic Interdependence

However, another assumption is the complete opposite from the first assumption. As beneficial as it could be, economic interdependence could be one dangerous factor in the world function. That will be explained in detailed in this paragraph. The second assumption claimed that economic interdependence could also lead the world to instabilities and insecurities as well. First of all, economic interdependence is not always about peaceful cooperation all the time. There are possibilities in which conflicts could occur due to the economic ties, trade war or trade conflicts to be specific. For example, the case of US-Japan trade deficit. US trade deficit occurred dated back to during the 1960s. The frustration and tension from the United State towards Japan grew continuously. The United State pressed Japan to restrict its import to the United State voluntarily, to reduce Japanese saving rates, to decrease non-tariff barriers to U.S as well as to covert Japan’s domestic structure, however, none of these worked out in anyway. The United State resentment escalated when Japan firms began to buy up the U.S. real estate and industry. In 1995, U.S., the Reagan administration threatened to impose a 100 percent tariff on imported Japanese luxury automobiles such as television, air conditioners, computer and various others electrical equipment. It is said that only the eleventh hour discussion calmed the action, which was so close to accelerated into a trade war (Papp,2002, p258). Another