The paper 'How Trade and Globalization Can Help the Poor in Both Developed and Developing Countries' is a perfect example of a Macro and Microeconomics Case Study. Poverty is a major concern in the world as the population continues to increase significantly since the industrial age. Human beings will continue to increase due to improved health care and access to basic amenities. The UN project that the population will reach almost ten billion by the year 2050. A significant population increase will be concentrated in both developed and developing countries. According to the World Bank, the majority of people in the world are poor and live below one dollar per day.
Poverty conditions limit an individual from accessing basic needs. Extreme cases of poverty may result in death in adults and an increase in mortality rates among the children. In 2000, the UN initiated the Millennium Development Goals (MDG’ s) during the Millennium Summit. The UN developed a set of eight goals addressing specific issues. The first goal addressed poverty and hunger in the world. This goal aims at reducing poverty levels by half, by the year 2015.
Trade liberalization and globalization are some of the strategies being advocated by the UN to achieve its objective. Trade Liberalization Trade liberalization is the reduction or elimination of trade barriers between countries. It is commonly known as free trade. Trade barriers could be in the form of tariffs, quotas, and other non-tariff barriers. Tariffs are measures taken by a government aimed at raising the prices of goods entering a country. While quotas are set rules and conditions for controlling the physical quantity of goods entering the county.
The non-tariff barriers are policies that make it difficult to sell goods in another country. These trade strategies are aimed at protecting local businesses from competition from foreign companies. A reduction in tariff alters consumption patterns in the tariff-reducing country so that more imports are bought (Whalley 1985). Protectionism is adopted to close doors to external competitors. This protectionism, however, is seen as a contributor to poverty and underdevelopment. Globalization Globalization integrations world economies through the elimination of barriers on trade while strengthening communication and interaction between states. The movement of goods and labor in globalized economies is easier compared to the protectionist economy.
Globalization brings nations closer together and hence the world appears like a global village. Improved methods of information dissemination such as the use of the internet contribute positively in globalization to speed. Culture and ideas are exchanged without many limitations experienced earlier before globalization. That results to cohesion and understanding among nations. An integrated economy offers many opportunities for economic growth. Effects of Trade and Globalization to the Poor Liberalization of trade and globalization has both positive and negative impacts on those countries that adopt them.
Globalization may affect the growth of a country in different ways depending on government policies. Better policies are developed to address poverty in general due to globalization. The member states, therefore, do not operate in isolation but cooperate with other countries. Employment opportunities Studies indicate that economic globalization stimulates economic growth reduces poverty and generates employment opportunities. Globalization has changed the role of the state in economic development and the creation of employment (Cohn 2012). Trade Liberalization and globalization play a significant role in poverty eradication through job creation.
Lack of a source of income is a major contributor to poverty. Lack of employment opportunities occurs when a country’ s economy cannot absorb existing human labor.
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