Nowadays, financial markets,
industry, and politics are all internationalized. The occurrence of this has
increased transfer of wealth across countries; it has increased communication
throughout the world, an increased importance of trade in the economy and an
increase in international trade policies. Globalization has had detrimental
effects on the economy has created many challenges around the world.
globalisation is particularly common include financial markets, insurance markets and product markets, such as
markets for electronics, motor vehicles and agriculture. The globalisation of sport and entertainment is also a feature of the late 20th and early 21st centuries
Ricardo uses trade between
two countries being England and Portugal explain how it assists Portugal to
import cloth even if Portugal can produce cloth with less labour than England.
Current economists portray that England has a comparative advantage in
producing cloth. Ricardo states, “To produce wine in Portugal, it must
have 80 men for a year, and to produce the cloth in the same country, it must
have need of 90 men for the year also. Thus it would be advantageous for them
to export wine in exchange for cloth”(David Ricardo, n.d)
Many countries with low income will not be left out of
globalisation due to the increased reduction of trade borders throughout the
world. Rising countries such as India and China have reduced poverty and have
shown an increase in economic growth since they took on open economic policies
in the 1990’s. It is vital to put these policies in place so that more
countries will want to partake in globalisation. In some parts of the world there are no guarantees that the wealth from
inward investment will assist the local community of the less developed
countries. Often, profits are sent back to the MEDC where the TNCs are based.
If it becomes cheaper to operate in another country, the TNC might close down
the factory and make local people redundant. However, If developing countries know that they will not have to suffer from
inequalities they will want to join globalization. A study found that foreign
investment has had a positive impact on economic growth when country-specific
factors are taken into account. These factors include; domestic financial
development, school attainment, and national income.