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Globalisation: The Development of a country

Globalisation plays a very integral part in today’s world. This article will show how globalisation has affected the foreign trade between countries. It will tell us about the types of economy that a country follows, that is Open Economy and Closed Economy along with an example of each country. This essay will critically evaluate the pros and cons of each economy and will come to a conclusion which is the best economy from both of them for a country. In the end of my essay I will conclude by providing the readers with a broad understanding on the topic of globalisation and trade which help them to understand the importance of globalisation in the 21st century.

Globalisation: The Development of a Country
According to IMF (1997) ‘Globalization refers to the economic interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology’. Due to development in the economic, social, technological and political segments globalisation has been rapidly increasing over time. Eventually, globalisation started affecting not only the lives of the people but also the business and service sectors. As there has been a rapid increase in globalisation trade not only takes place personally but also takes place on internet like e-business from one country to another (Mufwene, S. 2002). This shows how trade and technology are interlaced as a result of globalisation. Research studies have shown that before 1870 hardly there was any positive growth in the GDP per person. One source (Maddison, 2001) showed that after the 2nd World War there has been 3% growth in the GDP per year compared to the rate of percentage during 1820-70 which was only about 0.5% per year which then increased at a very slow rate upto 1.3% in the 1870-1913(Crafts, 2003). Globalisation has many advantages, few of them are: it has helped to raise the standard of living of people by providing consumers with many substitutes of goods and services for lower prices as there was intense competition among firms, helped countries develop by allowing trade among countries which would help the firms to know how to make effective strategies and be able to produce goods at lower cost, it has increased job opportunities for unemployed people and has also raised the GDP of the country (Streeten, P. 1998). As every coin has two sides, besides these advantages globalisation also has few disadvantages like: developing countries will face tough competition by the developed countries, inequitable distribution of the resources as multinational companies will also use our country’s resources and due to globalisation there will an increase in the generation gap. (Globalization and the identity dilemma, 2012, 99) Open and Closed Economy

The two types of trade are Open Economy and Closed Economy. Open economy refers to any economy in which foreign trade takes place; that means that the country permits exchange of goods and services from one country to another. Countries such as USA, Europe, Singapore, Malaysia, China, India, Taiwan and many more. Most of the countries depend on foreign income to meet the needs of the countrymen. Countries having open economies also have to face challenges from the other nations; as well as if the other country has financial problems then it will have a direct impact on the trading country. Thus, the countrymen have to wisely trade with other countries inorder to avoid conflicts and maintain peace in the global economy. Usually, political conflicts can be solved by the system of open economy, as they develop mutual strength and trust between the two countries while they are importing and exporting the goods. Importing goods is when goods...
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