Gains from Globalization
The gains from globalization can be analyzed in the context of the three types of channels of economic globalization identified earlier.
Trade in Goods and Services
According to the standard theory, international trade leads to allocation of resources that is consistent with comparative advantage. This results in specialization which enhances productivity. It is accepted that international trade, in general, is beneficial and that restrictive trade practices impede growth. That is the reason why many of the emerging economies, which originally depended on a growth model of import substitution, have moved over to a policy of outward orientation. However, in relation to trade in goods and services, there is one major concern. Emerging economies will reap the benefits of international trade only if they reach the full potential of their resource availability. This will probably require time. That is why international trade agreements make exceptions by allowing longer time to developing economies in terms of reduction in tariff and non-tariff barriers. “Special and differentiated treatment”, as it is very often called has become an accepted principle.
Movement of Capital
Capital flows across countries have played an important role in enhancing the production base. This was very much true in 19th and 20th centuries. Capital mobility enables the total savings of the world to be distributed among countries which have the highest investment potential. Under these circumstances, one country’s growth is not constrained by its own domestic savings. The inflow of foreign capital has played a significant role in the development in the recent period of the East Asian countries. The current account deficit of some of these countries had exceeded 5 per cent of the GDP in most of the period when growth was rapid. Capital flows can take either the form of foreign direct investment or portfolio investment. For developing countries the preferred alternative is foreign direct investment. Portfolio investment does not directly lead to expansion of productive capacity.
<a href://www.govindam.org> Govindam Business School </a>
It may do so, however, at one step removed. Portfolio investment can be volatile particularly in times of loss of confidence. That is why countries want to put restrictions on portfolio investment. However, in an open system such restrictions cannot work easily.
- Author Articles
- More From This AuthorTarget Costing Compiled by : Bhupendra Jain; 9811255704 Target costing is the process of determining the maximum allowable cost for a new product and then developing a prototype that can be...Topic: - Operation Support System / Operation Management. Q1. Define Operation support system? · It process business transaction. · It controls industrial process. · It support enterprise...Integrated Applications. Q1 Define Integrated Applications? · Integrated Applications is the series of applications designed so that output of one application can be automatically the input for...Manufacturing Information System. Q1. Define Manufacturing Information System? · It supports all production function. · It supports all Operations function. · Includes all activities relating to...The classification adopted by the ILO is given below Walfare and amenities within the establishment 1. Latrines and urinals 2. Washing and bathing facilities 3. Crèches 4. Rest shelters and canteens...
- Related Articles
- Related ArticlesGetting the company of Manchester girl is something that everyone wishes to have in his trip. You may come across many young and vivacious girls in this city that are completely stunning ladies. These girls...From the first glance the River Seine in Paris may just look like a plain river which runs through Paris, but it happens to be much more than just that, having turned into a major tourist attraction and a...In our everyday living, we entertain ourselves with films, video clips, music and information on the portable unit, while traveling in bus or being at home. For online video most well-known source is ...Tickets printing are a pattern that isn't likely to go away too quickly. Be it for the theatre or even a special screening or the public or the playground or for the zoo, the truth is it includes any public...Corporate trophies and plaques have been given out since time immemorial. Initially carved out of wood, today corporate trophy is made from different materials, come in different shapes and are given for...
- Latest Articles
- Latest ArticlesDry, peeling male organ skin can send any man into a state of panic, especially when there is no obvious cause. Flakes of skin falling away from the Johnson are not only unattractive, they can appear as a sign...Discovering an excellent elder care facility in Los Angeles, CA is a job lots of families must endure. Because so many "baby-boomers" are already retired or retiring, lots of people are in the process of ...A Mother or Father will find themselves upon death in a high position in Paradise, and they will ask Allah, "By Allah, how can I be in a position such as this, when I feel I do not deserve such a position?"...Getting the company of Manchester girl is something that everyone wishes to have in his trip. You may come across many young and vivacious girls in this city that are completely stunning ladies. These girls...From the first glance the River Seine in Paris may just look like a plain river which runs through Paris, but it happens to be much more than just that, having turned into a major tourist attraction and a...