Globilization Essay

715 Words3 Pages
Globalization is becoming ubiquitous as the world sees technological advances, now the world is seeing an attempt to manage the global economy. This was a major topic at the G20 summit. The key objective was the “rebuild the whole international financial architecture, make it open and fair, effective and legitimate.” This seems to be very beneficial to the world, but if the list of countries attended is looked at, this idea to rebuild international financial architecture would only help 85% of the world, what will happen to the other 15%? It may turn out that 85% the world is going to make agreements just like the European Union, to have the same currency, and set up free-trade boundaries, and maybe then full specialization may be seen in some countries. Regardless of whether these countries form a union, each country will participate in protectionism. All countries will act in their own self interests, if it is in their interests to be part of a free trade area then it will join. All countries will participate in what is called protectionism, to protect the countries interests. There are three major types of protectionism, tariffs, quotas, and subsidies, all of these countries will use these tools to benefit their economies. A tariff is a tax imposed on imports. As the graph shows, the area that is grey between 0-Qs and 0-Pworld is the local revenue without the tariff. The grey area between 0- Qs and 0-tariff is the local revenue after the tariff. The tariffs main purpose is to increase the price of imports, which makes local products comparatively more competitive. Another way countries keep local revenues high is by imposing a quota on imports. A quota is a number limit on the amount of imports allowed into a country. A country can easily make a quota, and license only certain companies to export a limited amount to the country. This creates a

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