IMPACTS OF A BORDERLESS SOCIETY

Impacts of a borderless society

Impacts of a borderless society

Meals:

Fish and chips

Nachos

Components of the two meals:

Fish

Potatoes

Cheese

Jalapeño

Countries from where these were imported:

Mexico

India

Bangladesh

The expansion of international trade in the 20th century has contributed to unparalleled economic growth. Global per capita GDP has increased almost fivefold, although this growth has not been uniform. More recently, the Heckscher-Ohlin-Samuelson model of trade has argued that the free movement of goods and factors of production (capital and labor) operating in a well-integrated world economy provides the greatest potential for maximizing human welfare. 6 Economic integration and free trade provide economies of scale for countries too small to achieve them domestically, and they stimulate economic growth through the diffusion of new technology (Michele, 2006).

In the market, allocation of goods is based on voluntary exchange between citizens. In the case of private goods, it is not a problematic issue to determine the amount of good and its cost and price it to the consumers. However, in the case of public goods, it is impossible to determine the amount consumed by each individual who benefits. We cannot talk about how much national defense is purchased by each citizen. If the marginal cost of each consumer is zero, then it is meaningless to charge a price. Thus, unlike private goods, which can be parceled out among individuals, public goods are impossible to charge directly. The payments for public goods, on the other hand, do not correspond to the amount of demand or consumption. Therefore, provision of public goods should not be left to market mechanisms. For this reason, as James Buchanan (1968) notes, “Decisions on the demand-supply of public goods are made through political, not market, institutions” (p. 5). Indeed, the existence of market failures requires a public policy, and this is the point on which Samuelson (1954) attempted to develop a pure theory of public goods.

Specifically, Sachs and Warner argue that liberal trade policies generate growth. They developed a measure of openness based on tariff rates for capital equipment, the extent of nontariff barriers, and the degree of distortion in the foreign exchange market. They constructed a 0-1 dummy of openness for 79 countries, scores given for each of the following five conditions with a 0 given if the condition held true during the period 1970-1989:

1. Average tariff rates are over 40% on capital goods and intermediates.

2. Nontariff barriers cover 40% or more of imports of capital goods and intermediates.

3. The country operates under a socialist economic system.

4. There is a state monopoly of the country's major exports.

5. The black-market premium on its official exchange rate exceeded 20% in the 1980s or 1990s.Perhaps paradoxically, then, for more and more people, the influence of consumerism on their lives is growing. As a consequence, around the world, mass consumer society has emerged as the major source of economic and social influence. This signals that the notion of the modern, self-disciplined individual, in which consumers are professed to be rational, ...