Trade essays Flashcards
To what extent does globalisation lead to income inequality
Definitions
- globalisation is is process of increasing integration and interdependence among countries
- income inequality is the extent to which income is unequally distributed across a population.
KAA1
Globalisation can exacerbate income inequality by benefitting highly skilled workers & capital owners.
- leads to technological advances that favour highly skilled workers. Skilled workers in like finance, pharmaceuticals benefit higher wages, while unskilled may see wage stagnation or job loss
- allows capital flow freely across borders,leading to greater returns for capital owners. Business move to lower cost regions and benefit low labour cost, wages of unskilled workers stagnate
- lead to job losses in like manufacturing, widening income gap
KAA1 Evaluation
globalisation created opp for developing countries to reduce income inequality
- enables them to access int’l markets, attract FDI and improve economic growth, increase employment and raise wages for low skilled workers. As economies develop income inequality may decrease due to improved access to education etc
- China - globalisation has lifted million out of poverty and improved standards if living of then disadvantaged groups.
KAA 2
Can reduce income inequality by promoting int’l trade & economic growth
- Trade liberalisation encourages exports and can increase national income, providing new job opportunities across various sectors
- FDI can stimulate growth in developing countries, providing jobs, increasing incomes for low income groups. Can help reduce inequality as they benefit from higher wages and improves employment
- transfer of technology and knowledge, which can improve productivity in developing countries
examples For KAA 2
Chinas integration into the WTO led to rapid economic growth and recursion in poverty, even income inequality between rural and urban areas increased slightly
Liberalisation of trade in countries like India and Vietnam has helped boost exports and industrialisation, leading to job creation -> wage growth
Evaluation for KAA 2
Benefits of globalisation aren’t evenly distributed, even in developing countries.
- might provide economic benefits, it can also increase regional inequality within developing countries. Urban areas benefit more from globalisation die to better infrastructure and access to capital
Assess the extent to which protectionism is beneficial for an economy
Definitions
- protectionism are policies implemented by govts to restrict imports or promote domestic industries
Protectionism aims to safeguard domestic jobs, reducing trade deficits and support infant industries but has long term trade offs
KAA 1
Protectionism protects domestic jobs and infant industries
- emerging industries may struggle to compete with established foreign competitors w/o protection.
- this would reduce competition from cheaper foreign goods, preserving domestic employment in vulnerable sectors
EG: US imposed tariffs on steel imports to protect its domestic steel industry, preserving jobs
KAA 1 Evaluation
Protectionism raises consumer prices and reduces allocative efficiency.
- higher tariffs increase the price of imported goods, leading to reduced consumer surplus. Domestic produces face less competitive pressure to innovate or reduce costs, leading to inefficiencies
A*=The long term costs of protectionism may outweigh short term benefits, especially in economies reliant on global supply chains
KAA 2
Protectionism can reduce trade deficits and improve macroeconomic stability
