QUESTIONS

Questions

Questions

Answer 1: Advantages of free trade?

The existence of trade has always been present between people and between countries. However since the 2nd World War trade in goods and assets has gained a larger significance everywhere. There are various advantages related to globalisation - first the foremost related to trade and investments spreading wealth and linking countries together, however simultaneously there are various negative consequences.

Some of the main advantages are:

Increased liquidity of capital allowing investors in developed nations to invest in developing countries.

Increased free trade between nations.

Corporations have greater flexibility to operate across borders.

Increases in environmental protection in developed nations.

There will be a reduction in the likelihood of war between developed nations.

Greater independence of nation-states.

Spread of democratic ideals to developed nations.

There will be a reduction of cultural barrier, increases the global village effect.

Faster and easier transportation of goods and people.

There will be increased flow of communication allowing vital information to be shared between individuals and corporations around the world.

The presence of global mass media will tie the world together.

Economic Liberalists argue that free trade would be beneficial to all countries if each country exports goods that it has the comparative advantage in producing, and imports products that they do not specialize in producing. Thus maximizing profits in they're own specialized exports and obtaining other goods cheaply from other countries. However, as Clive Hamilton observes (2002:61) the comparative advantage theory makes many assumptions that do not hold in reality. Assumptions such as the non-existence of unemployment, perfect competition and the overlooking of implicit cost such as pollution and damage to the natural word make this theory in applicable in the real world. Even so this theory remains the basis for pushing free trade in the global market.

Anweer 2: slow rate of factors of slow growth of Africa

Africa achieved relatively high growth rates in the first decade of the twentyfirst century, culminating in a continent-wide average growth rate of 6.1 per cent in 2007. Although rates varied across the continent, this relatively fast growth was generally shared, with several countries experiencing growth rates that exceeded their population growth rates, thus leading to increases in per capita income. This rapid growth was generally due to increased investment financed by high commodity prices, resource extraction, foreign direct investment (FDI) and inflows of other foreign resources, as well as macroeconomic stability and better economic management. This relatively rapid growth was however, not accompanied by growth in employment, as the rates of unemployment and underemployment increased in most African countries.

Unemployment rates remained in double digits in a large number of African countries. The 2008 global financial and economic crises exacerbated the unemployment problem through their impacts on growth, export earnings, government revenues and foreign capital inflows into Africa. Like the Ouagadougou Declaration and Plan of Action on Employment and Poverty Alleviation in Africa (2004) and the objectives of the New Partnership for Africa's Development, the Economic Report on Africa 2010 (ERA 2010) focuses on how African countries can use the lessons provided by the recent global ...