Globalization

Global Studies 10 – Extra Reading 1

- Basic principles that bring prosperity:

1) Investment (foreign)

2) Spread of technology

3) Strong institutions

4) Sound macroeconomic policies

5) Educated workforce

6) Existence of a market economy

7) Participation and integration in the global economy

- And the biggest threat to continuing to raise living standards throughout the world is not that globalization will succeed but that it will fail.

- People of developing countries have the biggest need for globalization because it provides them opportunity to take part in the global economy.

- These opportunities come with risks, such as volatile capital movement so IMF help economies reduce and manage these risks.

WHAT IS GLOBALIZATION?

* Increasing integration of economies around the world, particularly through the movements of goods, services and capital across borders.

* Movement of knowledge (technology) or people (labor) across international borders.

* Technological advances that made it easier and quicker to complete international transactions.

Growth in global economy promote efficiency through competition and division of labor – in specialization

Globalization extends greater access to modern technologies in health care, facilitate commerce and education, and create a framework for corporation among nations.

Globalization implies that information and knowledge get dispersed and shared – avoid ideas that have a track record of failure.

INTERNATIONAL TRADE

Core element of globalization is the expansion of world trade through the elimination or reduction of trade barriers, such as import tariffs.

Imports – wider variety of goods at lower prices, provide strong incentives for domestic industries to remain competitive.

Exports – source of economic growth, stimulate job creation as industries sell beyond their borders.

Trade promotes economic resilience and flexibility, as higher imports help offset...