Does Golabaization Lead to Economic Growth

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Category: Societal Issues

Date Submitted: 06/05/2008 08:51 PM

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Globalization is a concept that divides the world into different spheres of opinion. According to Dan Keeler, a writer for the Global Finance Magazine, globalization is “the process of greater integration within the world economy through movements of goods and services, capital, technology and labor” (2006, p.16). Neo-liberalists view globalization as a gateway to economic growth while dependency theorists argue that it leads to economic inequality. According to Nassar and Payne, authors of Politics & Culture in the Developing World: The Impact of Globalization, economic growth is “an increase in the production levels of goods and services.” (2006, chap. 6). This paper will provide information to determine if globalization leads to economic growth and this will be done by observing those factors in various countries.

A prime example of increased economic growth is China. Before 1978, the Chinese economy was based on a Soviet-style centrally planned economy, an economic system where the state makes all decisions about the production and allocation of goods and services (Myers, 2004). When Mao Zedong came into power, he decided the previous economic model was no longer adequate for China. He initiated The Great Leap Forward, an effort to speed up progress by shifting rural manpower into manufacturing (Encyclopedia Britannica, 2006). Ultimately the plan failed, causing the deaths of millions of people and making China lag behind the industrialized nations of the West and the newly industrializing nations of Asia.

When China finally opened its markets to the international community, it experienced rapid economic growth. During the last two decades, China’s GDP (gross domestic product) growth has averaged almost eight percent. China now ranks as the sixth largest economy in the world. In addition, according to Ravallion, a Senior Information Officer with the World Bank’s Development Economics Research Group, “between 1981 and 2001, the proportion of...