Economic Policy and Global Environment





Economic policy and Globalization

Introduction

The article is about the impact of globalization on the workers of America. According to (Gao Shangquan, 2000) globalization refers to the combination of all markets at one place. It includes exchange of goods and services among the different countries of the world. (R.Cardarelli et al, 2010) concluded in their study that to survive in this phase of globalization policies makers of the country should be emphasized on macroeconomic policies like manipulation of interest rate, fiscal policy, monetary policy and exchange rate policy. These are macroeconomic variables and they strongly impact on economic growth of the country. For instance interest rate is very important for foreign and direct investment in the country. Monetary policy plays a very important role in the stabilization of prices.

The article written by Eduardo porter published in New York Times reflects the key factors which should be emphasized in the policies for the growth of workers in this era of globalization. The issues which are highlights of this article are international trade, performance of the workers, policies for labor or work force, foreign competition and its impact on the domestic market. This article also highlights the previous and current picture of education of workers being provided by the government. It also gives light on one of the major economic issue that is transfer of capital to different countries. Simultaneously the author has also suggested some policies which can be implemented in order to improve the economic development in the country and to prepare for the challenges of globalization.

Discussion

Trade defines as the exchange of goods and services between the countries and within the countries. There are two forms of trade that are domestic or local trade and international trade. Domestic trade occurs between the regions within the country while foreign or international trade takes place across the borders of the countries or between the different countries. The policy of trade strongly depends upon the concept of comparative and absolute advantage theory. The concept of trade liberalization refers to the concept of free international trade. According to Adam Smith concept of absolute advantage trade is good for economic growth. (D.Detzer, 2010) did a study about the impact of trade liberalization on economic growth and concluded that it is good for country economic growth.

According to the author of the article “The Folly of Attacking Outsourcing” the panic of Americans has increased due to free trade and globalization. In economics, free trade means the exchange of goods and services without any boundaries and restrictions.

This is due to that the labor force of this country is facing problems to compete with the labor force coming from developing countries. The imported labor is ready to work on low wages which is a big threat to domestic labor force. America is very active in free trade as it is part of NAFTA(North American Free Trade Agreement). Many policy makers in America are against of NAFTA as they are ...