Mgt 448 Week1 Individual Paper

1111 WordsOct 9, 20125 Pages
o What is globalization, and what are some of the traditional international trade theories that support the concept of globalization? Once not so long ago each country had its own mostly autonomous economy. Cross-border trade and investment was banned or restricted and there was no global economy. Things like ethnic, and religious differences, different languages, time zones, distance, government regulation, and other factors made trade between countries difficult or altogether impossible. As technology in communications as well as transportation improves some of the barriers to cross-border trade have disappeared. Things like the world wide web, and the commercialization of the jet or cargo plane for shipment, have helped to bridge the cultural gap and the actual distance between countries. The economies of many countries, like the United States and China for example, have become intertwined with each other. As countries national economies begin to merge together into one global economy we see the beginnings of globalization. C.W. Hill defined globalization as "the shift toward a more integrated and interdependent world economy." (2009) There are many different trade theories both old and new. Some of these theories support the concept of globalization but not all of them do. Mercantilism was developed in the 16th and 17th centuries, and it is based on the concept that countries should encourage exports and discourage imports. The theory is mostly outdated today, but you can see that it is only half in favor of globalization. The next theory is Adam Smith's theory of absolute advantage. This one dates back to 1776 and was one of the very first trade theories to advocate unrestricted free trade between countries. Smith thought that the "invisible hand" of the market should decide for a country what they need to important and export. Smith did not think that a

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