Comments on: Globalization’s winners and losers, and losers, and losers… http://welkerswikinomics.com/blog/2007/04/22/globalizations-winners-and-losers-and-losers-and-losers/ for students and teachers of AP and IB Economics Sat, 22 Nov 2008 07:28:16 +0000 http://wordpress.org/?v=2.6.3 By: Michael Liu http://welkerswikinomics.com/blog/2007/04/22/globalizations-winners-and-losers-and-losers-and-losers/#comment-73 Michael Liu Wed, 02 May 2007 12:41:52 +0000 http://welkerswikinomics.com/blog/?p=14#comment-73 China to some extent, while still maintaining some of its communist policies and governmental control, has opened up to globalization. This extent has been enough to improve the standard of living of Chinese citizens over the past several decades. International trade has increased specialization, allowing China to become more efficient in its production lines. Increased imports and exports increase money flow. Foreign investments and entry of foreign companies introduces more jobs for the Chinese citizens and new technology. Snowball effect occurs, and new firms enter the Chinese market as it is a site of great potential. China to some extent, while still maintaining some of its communist policies and governmental control, has opened up to globalization. This extent has been enough to improve the standard of living of Chinese citizens over the past several decades. International trade has increased specialization, allowing China to become more efficient in its production lines. Increased imports and exports increase money flow. Foreign investments and entry of foreign companies introduces more jobs for the Chinese citizens and new technology. Snowball effect occurs, and new firms enter the Chinese market as it is a site of great potential.

]]> By: Michelle Miao http://welkerswikinomics.com/blog/2007/04/22/globalizations-winners-and-losers-and-losers-and-losers/#comment-70 Michelle Miao Wed, 02 May 2007 04:40:00 +0000 http://welkerswikinomics.com/blog/?p=14#comment-70 Those who tout globalization as the world's rosy route to widespread prosperity cite China as their prime example that economic growth comes hand-in-hand with alleviation of poverty. But exactly how compelling is this China-argument? Yes, poverty levels have decreased and everyone's living a heck of a lot longer, but China isn't your typical globalizing nation. China's government has kept a tight grip on the economy throughout the seemingly hysterical boom of the past two decades, and it is precisely China's authoritarian bureaucracy the world's beacons of democracy so love to hate that has saved the nation from resembling say Nigeria-- a country where the benefits of globalization are dubious. China has projected enviable statistics across the board, but China is... China. While the GDP's of countries such as Nigeria have increased with the advent of globalization, the wealth gaps in such countries have increased, literacy rates still languishes at low levels, no middle-class hasn't managed to manifest itself, and life generally just hasn't gotten any better for the average Nigerian. So it may be just a little manipulative for the globalization camp to use "look at China," to persuade countries to jump on the globalization bandwagon. Those who tout globalization as the world’s rosy route to widespread prosperity cite China as their prime example that economic growth comes hand-in-hand with alleviation of poverty. But exactly how compelling is this China-argument? Yes, poverty levels have decreased and everyone’s living a heck of a lot longer, but China isn’t your typical globalizing nation. China’s government has kept a tight grip on the economy throughout the seemingly hysterical boom of the past two decades, and it is precisely China’s authoritarian bureaucracy the world’s beacons of democracy so love to hate that has saved the nation from resembling say Nigeria– a country where the benefits of globalization are dubious. China has projected enviable statistics across the board, but China is… China. While the GDP’s of countries such as Nigeria have increased with the advent of globalization, the wealth gaps in such countries have increased, literacy rates still languishes at low levels, no middle-class hasn’t managed to manifest itself, and life generally just hasn’t gotten any better for the average Nigerian. So it may be just a little manipulative for the globalization camp to use “look at China,” to persuade countries to jump on the globalization bandwagon.

]]> By: Jay Jin http://welkerswikinomics.com/blog/2007/04/22/globalizations-winners-and-losers-and-losers-and-losers/#comment-68 Jay Jin Tue, 01 May 2007 16:43:08 +0000 http://welkerswikinomics.com/blog/?p=14#comment-68 Protectionism jumpstarts development. History's pretty clear on that. Some countries have a lot of catchup to do. Their current levels of productivity and technology development can't withstand pure global competition. China and India chose significantly more protectionism than the WTO extols, and as a result, they're booming. It's the infant industry exception, on the national scale. It's justified and beneficial to growth, for a certain period of time. After that, protectionist countries can afford to gradually back off of the controls. Some domestic industries will be strong enough to continue when the handcap's removed. The other ones will fail, and optimal levels of specialization will be reached. Protectionism jumpstarts development. History’s pretty clear on that. Some countries have a lot of catchup to do. Their current levels of productivity and technology development can’t withstand pure global competition. China and India chose significantly more protectionism than the WTO extols, and as a result, they’re booming. It’s the infant industry exception, on the national scale. It’s justified and beneficial to growth, for a certain period of time. After that, protectionist countries can afford to gradually back off of the controls. Some domestic industries will be strong enough to continue when the handcap’s removed. The other ones will fail, and optimal levels of specialization will be reached.

]]> By: Linda Witters http://welkerswikinomics.com/blog/2007/04/22/globalizations-winners-and-losers-and-losers-and-losers/#comment-65 Linda Witters Tue, 01 May 2007 12:41:56 +0000 http://welkerswikinomics.com/blog/?p=14#comment-65 When it comes to government control, I think that the presence of the government has helped China experience a rather smooth transition from a command economy to a mixed economy. Without government intervention, the incredible economic growth China has been experiencing could very well get out of hand. Just look at Russia after Yeltsin's shock therapy reforms. Therefore, I think the rather careful management of the economy by the Chinese government has definitely been beneficial to the country. When it comes to government control, I think that the presence of the government has helped China experience a rather smooth transition from a command economy to a mixed economy. Without government intervention, the incredible economic growth China has been experiencing could very well get out of hand. Just look at Russia after Yeltsin’s shock therapy reforms. Therefore, I think the rather careful management of the economy by the Chinese government has definitely been beneficial to the country.

]]> By: Hae Ryun Kang http://welkerswikinomics.com/blog/2007/04/22/globalizations-winners-and-losers-and-losers-and-losers/#comment-61 Hae Ryun Kang Tue, 01 May 2007 07:33:31 +0000 http://welkerswikinomics.com/blog/?p=14#comment-61 It’s not just the beef. Mainly the Korean-American FTA has opened the markets for medicine, the Korean movie industry, agriculture, and cars. Let me give you an example of Mexico, after NAFTA. In a nutshell, after opening up the Mexican movie industry, exposing it to competition against Hollywood, Mexican movies all but disappeared. For firms, small, local firms will eventually lose out in the competition, making Korea a much more oligopolic economy than it already is. The amount of $ will increase, but it will be concentrated at the top…income inequality will increase tremendously. How about the privatization of railroads, electricity, water supplying firms, etc? If they are to be privatized by an American firm, prices are going up. American firms aren’t looking out for the best interest of the Korean people—it’s profit, it’s money that matters. The power of Korean banks will decrease tremendously. Right now banks are already avoiding big-risk investments, placing their emphasis solely on stable investments that will raise their profits…the reason is simple: the principles of shareholder capitalism. Shareholder capitalism increased after the IMF in Korea, when foreign investors became big-time shareholders of Korean banks. After the FTA, it’s “safe” to say that this trend will intensify and worsen. Last but not least, the quality of life will decrease. Yeah, yeah, yeah, nominal GDP will increase and the economy will grow, but ECONOMIC GROWTH DOES NOT MEAN ECONOMIC DEVELOPMENT. As income gap increases, the quality of life for individual Koreans will decrease, middle-class will decrease in size, and the environment will be more polluted by foreign firms, which will be protected under the rules of the FTA. So you ask me my opinion on whether government control is important in regulating the economy? In this globalizing world, I’d say government control is crucial. There are benefits of free trade and “opening up,” so to speak, but when you think of the OPPORTUNITY COST of ratifying the Korean-American FTA, I’d say the costs still outweigh the benefits. Except in the case of Korea, I really see no use of the government. What has it done to protect the Korean people? The FTA has already been ratified, and all Koreans can do is sit at the sidelines and watch. So much for democracy. It’s not just the beef. Mainly the Korean-American FTA has opened the markets for medicine, the Korean movie industry, agriculture, and cars. Let me give you an example of Mexico, after NAFTA. In a nutshell, after opening up the Mexican movie industry, exposing it to competition against Hollywood, Mexican movies all but disappeared.

For firms, small, local firms will eventually lose out in the competition, making Korea a much more oligopolic economy than it already is. The amount of $ will increase, but it will be concentrated at the top…income inequality will increase tremendously. How about the privatization of railroads, electricity, water supplying firms, etc? If they are to be privatized by an American firm, prices are going up. American firms aren’t looking out for the best interest of the Korean people—it’s profit, it’s money that matters.

The power of Korean banks will decrease tremendously. Right now banks are already avoiding big-risk investments, placing their emphasis solely on stable investments that will raise their profits…the reason is simple: the principles of shareholder capitalism. Shareholder capitalism increased after the IMF in Korea, when foreign investors became big-time shareholders of Korean banks. After the FTA, it’s “safe” to say that this trend will intensify and worsen.

Last but not least, the quality of life will decrease. Yeah, yeah, yeah, nominal GDP will increase and the economy will grow, but ECONOMIC GROWTH DOES NOT MEAN ECONOMIC DEVELOPMENT. As income gap increases, the quality of life for individual Koreans will decrease, middle-class will decrease in size, and the environment will be more polluted by foreign firms, which will be protected under the rules of the FTA.

So you ask me my opinion on whether government control is important in regulating the economy? In this globalizing world, I’d say government control is crucial. There are benefits of free trade and “opening up,” so to speak, but when you think of the OPPORTUNITY COST of ratifying the Korean-American FTA, I’d say the costs still outweigh the benefits.

Except in the case of Korea, I really see no use of the government. What has it done to protect the Korean people? The FTA has already been ratified, and all Koreans can do is sit at the sidelines and watch. So much for democracy.

]]> By: Hyung Jin Lee http://welkerswikinomics.com/blog/2007/04/22/globalizations-winners-and-losers-and-losers-and-losers/#comment-42 Hyung Jin Lee Thu, 26 Apr 2007 06:51:51 +0000 http://welkerswikinomics.com/blog/?p=14#comment-42 In fact, the above has already happened. Beef prices in Korea have fell significantly. Cheap beef sounds good to me, but probably not to those in the domestic industry. In fact, the above has already happened. Beef prices in Korea have fell significantly. Cheap beef sounds good to me, but probably not to those in the domestic industry.

]]> By: Stella Ryu http://welkerswikinomics.com/blog/2007/04/22/globalizations-winners-and-losers-and-losers-and-losers/#comment-40 Stella Ryu Tue, 24 Apr 2007 13:54:24 +0000 http://welkerswikinomics.com/blog/?p=14#comment-40 whether globalization helps a country to reduce poverty, in my point of view, globalization is only helpful for the countries which have developed its own industry strongly enough to compete with foreign industry. Adding to Hyung Jin's example of FTA between Korea and US, FTA is still controversial in Korea. The fear of FTA for Koreans is that US's cheaper goods imported can overwhelm Korean economy. If US imported goods happens to overtake domestic goods of Korea, it will be possible to cause deeper poverty, and higher unemployment in Korea as demand for domestic goods decreases. China is not so far away from the state where Korea is. I believe that it depends on how China reacts to what they encounter in open market of world. If China adapts new technology and increase its productivity and efficiency, it will enrich itself to reduce poverty. But if China finds foreign goods to be just superior, it would deepen poverty of China. So far, it seems that China is choosing right path to accept new technology and foreign investment in world trade, definitely reducing its own poverty. whether globalization helps a country to reduce poverty, in my point of view, globalization is only helpful for the countries which have developed its own industry strongly enough to compete with foreign industry. Adding to Hyung Jin’s example of FTA between Korea and US, FTA is still controversial in Korea. The fear of FTA for Koreans is that US’s cheaper goods imported can overwhelm Korean economy. If US imported goods happens to overtake domestic goods of Korea, it will be possible to cause deeper poverty, and higher unemployment in Korea as demand for domestic goods decreases. China is not so far away from the state where Korea is. I believe that it depends on how China reacts to what they encounter in open market of world. If China adapts new technology and increase its productivity and efficiency, it will enrich itself to reduce poverty. But if China finds foreign goods to be just superior, it would deepen poverty of China. So far, it seems that China is choosing right path to accept new technology and foreign investment in world trade, definitely reducing its own poverty.

]]> By: Hyung Jin Lee http://welkerswikinomics.com/blog/2007/04/22/globalizations-winners-and-losers-and-losers-and-losers/#comment-38 Hyung Jin Lee Tue, 24 Apr 2007 00:32:13 +0000 http://welkerswikinomics.com/blog/?p=14#comment-38 Recent was the Korea-U.S. free trade agreement, yet another example of globalization. There are still talks of how the Korean economy would fare in a FTA with the giant that is the U.S. economy. There has been speculation that the main losses would be the Korean industries of agriculture and film production, which would be overwhelmed by vast amounts of cheap, high quality goods from the U.S. On the other hand, production of electronics such as memory chips is what Korea excels at, and it would benefit from the lowered trade barriers that the FTA provides. Recent was the Korea-U.S. free trade agreement, yet another example of globalization. There are still talks of how the Korean economy would fare in a FTA with the giant that is the U.S. economy. There has been speculation that the main losses would be the Korean industries of agriculture and film production, which would be overwhelmed by vast amounts of cheap, high quality goods from the U.S. On the other hand, production of electronics such as memory chips is what Korea excels at, and it would benefit from the lowered trade barriers that the FTA provides.

]]> By: Victoria Martin http://welkerswikinomics.com/blog/2007/04/22/globalizations-winners-and-losers-and-losers-and-losers/#comment-31 Victoria Martin Mon, 23 Apr 2007 10:23:31 +0000 http://welkerswikinomics.com/blog/?p=14#comment-31 I guess this relates a lot to the incredible projected rate of economic growth we have been seeing in the news, over 11%, and its probably because of China's opening itself to the world, international trade has allowed for greater specialization, and foreign investment has provides much expertise and income for locals, and foreign companies are also responsible for a lot of the infrastructure and investment in capital that the Chinese can make use of today. It has also allowed for the introduction of technology as part of production in China, improving productivity and economic efficiency as well! Indeed, for China to expand its market for its products to the world they have made tremendous profits, allowing them to further invest in and purchase capital equipment, which would in turn help to increase productivity, stimulating further economic growth, like the kind we see projected in the news. I guess this relates a lot to the incredible projected rate of economic growth we have been seeing in the news, over 11%, and its probably because of China’s opening itself to the world, international trade has allowed for greater specialization, and foreign investment has provides much expertise and income for locals, and foreign companies are also responsible for a lot of the infrastructure and investment in capital that the Chinese can make use of today. It has also allowed for the introduction of technology as part of production in China, improving productivity and economic efficiency as well! Indeed, for China to expand its market for its products to the world they have made tremendous profits, allowing them to further invest in and purchase capital equipment, which would in turn help to increase productivity, stimulating further economic growth, like the kind we see projected in the news.

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