Globalization Process, Free International Trade

With the onset of globalization, trade barriers have diminished. This results in easier and faster transport of goods, and increase in foreign investments that create more job opportunities. In addition, the perpetuation of free trade reduces the possibility of beginning a war. However, let us be reminded that its economic pros are not universal and absolute. Although most benefit from it, unfortunate nations may still lag far behind. Furthermore, rich countries can take advantage of low wages, cause environmental damages to poor countries with limited pollution regulation and control, and impede home

In this chapter, talks about Globalization and Trade. Wheelan starts by using the example of a magical machine that turns corn into stereo equipment. “Imagine a machine that can convert corn into a stereo equipment”. He says that no matter where in the world you look, trade is a machine that can turn anything into anything else. In trading we are practically taking what we produce and turning it into what we can’t or do not produce. The best part of the trade machine is that it allows countries to specialize in producing just one good and then taking that one good and turning it into another good. Since in the trade machine you just need one thing to get whatever you want, you basically take whatever you are better at and focus only on producing that in order to trade it with different people that can offer you what you lack. This is the heart of trade, specialization.

There is no doubt that increasing in international trade is supporting the economic growth across the world, raising incomes and creating jobs. However, international trade can also some create economic obstacles, such as the international context and the market policy and regulations of each country, and consequently it can be said that the effects would have positive and negative sides, and it is useful to mention all of them and to take them into consideration.

Developing countries are adversely affected by globalization, especially in economy area. Globalization is a process which the world interconnection keeps increasing so it is possible to trade or exchange cultures conveniently. In the past, it was anticipated to develop a whole of countries’ economy or technology and solve some environmental issues such as air pollution or global warming. Unfortunately, until these days, the result of globalization does not reach 50% of economists’ expectation. The major reason of the evaluation is in spite of the fact that it provides advantages, globalization increase the gap between rich and poor. One of the biggest victims is developing countries. They suffer a great loss from the drawbacks of globalization. These are excessive outflows of brain and money, excessive competition in the world market, and Increase of economic polarization.

There is good evidence that globalization has resulted in a considerable increase in world trade over the past 20-30 years. Costa (2008) claims that the globalization makes services, goods, people and ideas move throughout the world more easily. He also maintains that cross-border world trade will play a more and more significant role in global GDP. By 2017, it will approximately occupy 15 percent. Nevertheless, Lin Y. (2006) argues that the globalization also has serious drawbacks. He considers that globalization does harm to both developed and developing countries. Through globalization, few people in developing countries gets benefit. Most of them are still as poor as before because the change of there is so tiny. He also claims that although

As George Soros, the Chairman of Soros Fund Management said: "I think there 's a lot of merit in an international economy and global markets, but they 're not sufficient because markets don 't look after social needs" (2000). Globalization allows businesses to grow due to the elimination of stringent trade restrictions and tariffs. Globalization also allows undeveloped nations the opportunity to flourish by creating jobs that were previously unavailable. As Lechner states in his Globalization Debates - Good vs. Bad, those in opposition believe that globalization is dangerous due to the “...inequities of oppressive global capitalism” (2000-2001). So, what are the upsides and downsides to globalization?

Although trade liberalization brings advantages for the economic growth in many countries as discussed above, there is questionable that in what way and to what extents trade liberalization affects the environment. The debates around these issues show that trade liberalization could influence the environment in both positive and negative ways and through various channels (Kirkpatrick & Scrieciu 2008). The Organisation for Economic Co-operation and Development (OECD 1994), identifies five types of environmental effects related to trade liberalization, that including: scale effects, structural effects, product effects, technology effects and regulatory effects. Panayotou (2000) also considers the effects of income level when examine the influences of trade on environment. Theoretically, each channel has both positive and negative effect (OECD 1994), but the overall effects of trade openness on environment will be the accumulated impacts of those factors.

Globalization advanced free trade, open markets, and competition in the world economy. Regrettably, this worldwide amalgamation and growth contributed to the equalities and inequalities between third world nation-states. The growing populace placed an extra demand on the third world nation-states for food, shelter, and clothing. Consequently, Africa, South Asia, and Latin America grew anxious since their populaces are predisposed to diseases, famine, and premature death. In chapter one of Promises Not Kept: Poverty and The Betrayal of Third-World Development John Isbister declared that in the twentieth cen¬tury,

Globalization advanced free trade, open markets, and competition in the world economy. Regrettably, this worldwide amalgamation and growth contributed to the equalities and inequalities between third world nation-states. The growing populace placed an extra demand on the third world nation-states for food, shelter, and clothing. Consequently, Africa, South Asia, and Latin America grew anxious since their populaces are predisposed to diseases, famine, and premature death. In chapter one of Promises Not Kept: Poverty and The Betrayal of Third-World Development John Isbister declared that in the twentieth cen¬tury,

Free trade is a policy in which the government does not interfere against imports or impedes with exports by applying tariffs (Encyclopedia, 2015). Free trade is about removing barriers like tariffs, quotas, and other restrictions. Tariffs are taxes that the countries enforce on imported goods and services, they are set in place to make trade harder. This ultimately causes the price of goods and services for consumers to be more expensive. Quotas are a limited quantity countries put on imports and exports. Barriers to trade is a government limitation on the amount of international goods and services. Countries decide to put up barriers on trade for the sole purpose of protecting their own economy and interests. The United States has free trade agreements with 20 countries, including the North American Free Trade Agreement (NAFTA), the Tran-Pacific Partnership Agreement (TPP), and the Transatlantic Trade and Investment Partnership (T-TIP). There are many advantages and disadvantages with free trade agreements.

In the actual free trade context in the globalized nation, it is referring to a freedom for businesses to trade between countries at no barrier from government intervention which includes imposing tax on the products and services, subsidies, import and export quota limitation, as well as imposing trade legislation. However, this cannot be realized in today’s world (White, 2008) due to the fact that each country needs to protect and balance between the three major aspects which is the social, economy and politic domestically in order to compete in the competitive world and at the same time contribute to peace of the world. This is especially true for the developing countries such as Malaysia, China, India and et cetera as compared to the

Globalization is known to be found almost in all countries all over the world. The definition of globalization is quite easy to understand, it is the process of integration and co-operation between different countries. So, how does globalization influence labor market? Although there are some benefits of globalization in several areas like culture and business, it has a negative impact on labor market. Serious consequences of trade liberalization, fast expanding of technology at factories and plants all around the world and growing gap between manufacturing-producing countries and agricultural-producing countries are known to be three major ways globalization affects labor market.

Economists of all time, either classical, new classical or modern, have never denied the importance of external trade. International trade have been considered as a back bone of the economy of any country. The issue of trade and free trade has been at the prime agendas of economists' for over last two centuries. David Ricardo and Adam Smith talked about the importance of free trade, and given Comparative and Absolute Advantage theories. Free trade or globalization is a hotly debated phenomenon in the world economic system of 21st century. If the economic affluence and economic growth of all the nations of the world could be brought at par with each other by the free flow of goods and services, irrespective of boundaries, under the free trade banner, then it is a situation for which, every country should struggle for. Bilateral trading arrangements, although less preferred to multilateral ones, are one of the instruments employed by both developed and developing countries, to protect their export markets and to guarantee their trading activities in the future.

With the development of science and technology as well as transportation, economic and trade globalization in gradually, most companies are not satisfied with the domestic market, and began to open up markets in other countries, which is the origin of multinational enterprises. However, since the environment of the market is different from the host country, such as natural conditions, socio-cultural, or customer needs, which is particularly difficult to deal with the situation when to enter the market of a country, it will need to face the corresponding political risk. Political risk is a type of foreign exchange risk, thence, a prerequisite of political risk and foreign exchange risk of the occurrence of a prerequisite is the same, namely businesses or investors must hold foreign direct investment (Foreign Direct Investment), otherwise, there would not be political risks (Jensen, 2003). Therefore, for multinational enterprises, the economic benefit was on the most important position, and even beyond the political relations such as social system, human ideology, or challenge the traditional, however, for the country to say that in terms of national security goals happen with the economic interests if they have conflicting objective, the state will first meet the security objective, it would be more stressful for multinational enterprises in political risk.

Economic globalization has become the most important feature and a general trend of present world economic development. Globalization is a phenomenon and also a process of development of mankind and human society (Hamilton, 2008). It is the essential feature of the modern age. Globalization is the cross-border flows of capital and goods, including capital, labour, technology and natural resources (Bożyk, Misala & Puławski, 2002). Economic globalization is a historical process, and the germination of it could date back to the 16th century. After the industrial revolution, capitalist commodity economy, modern industry and transportation have been developing rapidly. The world market was fast expanded and the foreign trade was