Economic Interdependence Between Countries And The Global Economy

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The opportunities for trade between countries have greatly expanded in today’s global economy. At the same time, the nature and consequences of global economic interaction have become an increasingly important issue as countries are faced with greater pressure to adopt trade liberalisation policies. As a result of the highest economic interdependence between countries and the global crises, it has become common to question globalisation as beneficial for all countries. Within the political economics literature, the liberal position asserts that economic trade will be positively related to improved economic progress of nations and claims the positive-sum nature of the global economy. Critics of this view (mercantilists and Marxists) argue that, at best, trade policies constitute a zero-sum game because the economic resources are limited and, at worse, serve to increase inequality among nations. Thus, the extent to which the level of trade affects wealth in a country remains a point of contention.
The liberal perspective suggests that economic interdependence between the developed and developing states benefits the latter in that “through trade, international aid, and foreign investment, the less developed economies acquire the export markets, capital, and technology required for economic development” (Gilpin, 1987, p. 265). Liberals argue that such development is vital not only to economic progress, but to political and social progress as well.
This theory has its roots in
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