Global Economy: Between Free Trade and Protectionism

Due Saturday at 6pm

Please note a paper was already written however a revision is needed specifically for question 2.

Globalization was welcomed around the world at the beginning of the 1990s. Different trade theories were used to explain benefits of free trade and market liberalization. However, by the end of the twentieth century, voices of discontent were beginning to rise from Asia to North America.

Identify and read at least three journal articles focused on trends in globalization. Then, respond to the following:

• Identify current trends in globalization.
• Reason whether the global economy will return to the mercantilist stage, or if benefits of free trade and market liberalization will prevail. Why or why not?

Write a two-to-three-page paper in Word format. Utilize at least three scholarly sources in your research.

Running head:

Global Economy: Between Free Trade and Protectionism

1

Global Economy: Between Free Trade and Protectionism 3

Global Economy: Between Free Trade and Protectionism

Erika S. McNeil

B6

5

12

– M2A2

Argosy University/Atlanta

Professor Dr. Patrick Kehres

July 28, 2013

Foreign Trade the Global Way of Life

Globalization has united a world of nations and has influenced business, culture and the social environment. Throughout the centuries there has been a transition from mercantilism in which countries focused on limiting imports to free trade. Although there are many benefits to free trade, there are also staunch opponents to this system. Human rights, child labor, environmental protection and lack of regulation are areas of concern. The writer will focus on the benefits of free trade and why this system will prevail as the opportunities it creates outweigh the risks. Comment by Patrick: Citation needed. Comment by Patrick: Citation needed. Comment by Patrick: What about the other elements of the rubric?

According to Trends in Globalization, there have been two times in history which spurred globalization. The first was during the mid-19th century and the second began after World War II which carries on today. After World War 11 there was a substantial boom in expansion which resulted in an increase in merchandise exports by 8% between the timeframe of 1950-1973. Although there was a slowdown due to inflation directly following, in the 1990’s trade expansion increased again due to technology and innovation. “Despite the small contraction of trade caused by the dotcom crisis in 2001, the average expansion of world merchandise exports continued to be high – averaging 6 per cent for the 2000-07 period. For the entire 1950-2007 period, trade expanded on average by 6.2 per cent, which is much stronger than in the first wave of globalization from 1850 to 1913.1 As dollar prices expanded much faster after WWII than before WWI the nominal trade expansion of the former period is more than twice as fast as in the earlier period (9.8 per cent versus 3.8 per cent per annum).” (“Globalization and trade,” 2008, page number). During 1950-1973 Japan and European countries were the main players in global trade. This was partly due to the end of World War 11 and the Korean War. There was also an increase in European trade from 18.3% in 1953 to 31.2% in 1973 (“Globalization and trade,” 2008). Comment by Patrick: Any time you use numbers and years, you need citations. Comment by Patrick: So how does this information relates to this component of the rubric?
Identified a variety of trends including past and current trends that focus on the global market

Meerhaeghe asserts foreign trade and capital movements increased 3 times faster than GDP between 1950 and 2000. This was propelled by the decrease of transportation and telecommunication costs. Additionally, the author states the United States had a vested interest in free trade and therefore pushed this agenda during the 1970’s through the 1990’s (Meerhaeghe, 2012). Comment by Patrick: So why is this information important? How does it relate to the assignment?

In more recent years due to GATT and WTO many countries have embraced foreign trade by diminishing their tariff barriers. There has been a transition from centralized planned economies to market economies which has truly made it possible for trade to flourish. Additionally, multinational corporations have been responsible for propelling globalization forward. “In 1996, there were altogether only more than 44,000 MNCs in the whole world, which had 280,000 overseas subsidiaries and branch offices. In 1997, the volume of the trade of only the top 100 MNCs already came up to 1/3 of the world’s total and that between their parent companies and their subsidiaries took up another 1/3. In the US$ 3,000 billion balance of foreign direct investment at the end of 1996, MNCs owned over 80%. Furthermore, about 70% of international technological transfers were conducted among MNCs. “(Shangquan, 2000) Comment by Patrick: Citation needed. Comment by Patrick: Why is this important? Please do not leave the reading hanging… 🙂

There have been significant changes to culture and economics as a result of globalization. As such, free trade will continue to prevail as the benefits outweigh the risks. Meerhaeghe notes there is a high demand for American cultural products across the world. Marketing and advertising efforts are supported through television and radio internationally. Additionally, the English language has become a commodity and has become the primary language in international business. Moreover, foreign exchange has increased to $1,200 billion from $200 billion in the 1980’s (Meerhaeghe, 2012).

Lastly the evidence supports those nations who are involved in foreign trade experience a greater financial lift than their counterparts. “According to the Cato Institute’s 2004 report on Economic Freedom of the World, which measures economic freedom in 123 countries, the per capita gross domestic product in the quintile of countries with the most restricted trading was only $1,883 in 2002. That year’s per capita GDP in the quintile of countries with the freest trading regimes was $23,938.” (Tupy, 2006). Comment by Patrick: Did not see any part of the paper that talked to the following:

Explained whether the global economy will return to the mercantilist stage. Provided justification and discussed specific trends in support of the future of the global economy.

It is very important that the writer outline the paper so the components of the paper reflect the main components of the rubric. Please feel free to speak to me on the 10th so I understand how you answered the second part of the assignment.

References

Globalization and trade. (2008). Retrieved from

http://www.wto.org/english/res_e/booksp_e/anrep_e/wtr08-2b_e

Shangquan, G. (2000). Economic globalization: Trends, risks and risk prevention. Retrieved from

www.un.org/esa/policy/devplan/../bp2000_1shangquan

Tupy, M. (2006, January 3). Free trade benefits all. Retrieved from

http://www.cato.org/publications/commentary/free-trade-benefits-all

van Meerhaeghe, M. A., & , G. (2012). Globalisation: Concept, outcome, future–a continental view. European Journal of Law and Economics, 33(2), 239-306. doi:http://dx.doi.org/10.1007/s10657-011-9275-2

Explained whether the global economy will return to the mercantilist stage. Provided justification and discussed specific trends in support of the future of the global economy.

Assignment 2 Grading Criteria	Maximum Points
Identified a variety of trends including past and current trends that focus on the global market.	40
5
Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; and displayed accurate spelling, grammar, and punctuation.	12
Total:	57