Global Edge, Essay Example

Globalization has led to greater openness in the international economy, a better integration among international markets, and greater flow of goods and services between countries. By increasing trade between countries, it has also increased interdependency, thus, it is no surprise that we have seen progress in economic liberalization and reductions in protectionist policies. Capital and factors of production have become more mobile which has also benefitted developing nations. Organizations have become more efficient and profitable because of greater choices in factors of production (Intriligator, 2003) and lower production costs also benefit the consumers.

Globalization could also be credited with advancing free markets ideals around the world including China and if the globalization trend is reversed, socialist economic system, which has been slowly dying out, may again gain traction. Globalization has also helped in the quick dissemination of latest technologies around the world which is why developing countries have been catching up at an impressive rate. If the globalization trend were to be reversed, the gap between developed and developing countries will once again start rising instead of declining (Intriligator, 2003). Globalization has also been helping raise wages in developing countries because it is increasing workers’ productivity. Higher wages help workers improve their consumption lifestyle which in turn benefits the local country’s economy (Swagel & Slaughter, 1997).

Globalization has also been helping many countries improve their balance of trade and balance of payments (Bergen Community College) and they can specialize in the production of goods and services they are best at. Thus, globalization improves the average living standards around the world. If the trend were to discontinue, it may hurt some developing countries even more than developed countries who have greater resources and, thus, greater capability to face adverse economic conditions.

Most countries want to have strong trade relations with the major players in the global economy such as Australia, Canada, Sweden, United Kingdom, and the U.S. because these countries are all developed nations and buy and sell in significant volume. Data on the overall global economy size and trading volume will help us better understand the importance of these five countries in the global economy. The total estimated global GDP was $78.95 trillion in 2011. The total value of the overall global import and export activities is estimated at $17.58 trillion and $18 trillion, respectively in 2011 (Central Intelligence Agency). This means that the total import volume accounted for approximately 22.27% of the global economy and the total export volume accounted for approximately 22.8% of the global economy. Together, global import and export activities totaled $35.58 trillion or about 45.07 % of the global GDP.

Australia’s GDP was approximately $917.70 billion in 2011. The country’s export and import volumes were $266 billion and $236.3 billion during the same period. This means that Australia’s imports accounted for 25.75% of its economy and its exports accounted for 28.99% of its economy. Sweden’s GDP was approximately $379.4 billion in 2011. The country’s export and import volumes were $204.2 billion and $187.4 billion during the same period. This means that Sweden’s imports accounted for 49.39% of its economy and its exports accounted for 53.82% of its economy. Canada’s GDP was approximately $1.39 trillion in 2011. The country’s export and import volumes were $450.6 billion and $459.6 billion during the same period. This means that Canada’s imports accounted for 33.06% of its economy and its exports accounted for 32.42% of its economy. U.K’s GDP was approximately $2.25 trillion in 2011. The country’s export and import volumes were $495.4 billion and $654.9 billion during the same period. This means that U.K’s imports accounted for 29.11% of its economy and its exports accounted for 22.02% of its economy. USA’s GDP was approximately $15.04 trillion in 2011. The country’s export and import volumes were $1.51 trillion and $2.31 trillion during the same period. This means that USA’s imports accounted for 10.06% of its economy and its exports accounted for 15.40% of its economy (Global Edge). This demonstrates how international trade has become a major contributor to even the economic growth of developed countries as well.

References

Bergen Community College. (n.d.). The Importance of Globalization. Retrieved April 20, 2012, from http://www.bergen.edu/faculty/rangiello/global1.html

Central Intelligence Agency. (n.d.). The World Factbook. Retrieved April 20, 2012, from https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html

Global Edge. (n.d.). Global Insights by Country. Retrieved April 20, 2012, from http://globaledge.msu.edu/Global-Insights/by/Country

Intriligator, M. D. (2003, January). Globalization of the World Economy: Potential Benefits and Costs and Net Assessment. Retrieved April 20, 2012, from http://www.milkeninstitute.org/pdf/globalization_pb.pdf

Swagel, P., & Slaughter, M. J. (1997). Does Globalization Lower Wages. Retrieved April 20, 2012, from http://www.imf.org/external/pubs/ft/issues11/