How Does Globalization Affect The Economy

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Register to read the introduction… They claim that free market policies, together with outsourced labor and access to foreign financial markets made the global economy more susceptible to crisis by first driving down wages worldwide, and then encouraging massive increases in consumer lending. Investment banks and hedge funds, major sources of capital and credit, were then allowed to move from a regulated national environment and were able to operate within the almost completely unregulated international environment, in which speculators operated with no oversight and no limit as to the risks of their investments. (Creamer, …show more content…
Many poor developing countries produce agricultural crops such as coffee and wheat that are exported for income. Many wealthier countries like the US, Japan, and the European Union also produce these same exports, except that they provide large subsidies to their farmers to help offset the costs of growing their crops. As wealthier nations with other sources of income, they can afford to provide these subsidies to their farmers. As a result, the subsidized crops help to push down the average world market price of these products, and the poor countries have no choice except to sell their crops at much lower prices. This results in the severe diminishment of profit on exportable agricultural products for developing nations that may only be able to rely on agriculture as a source of outside …show more content…
Spending more money on agricultural endeavors such as these enable poor countries to increase the production of agricultural products by decreasing the cost entailed, resulting in greater profits for them and better competition with other countries for their products. If they are not able to spend money on research and technology, they will be unable to lower the cost of domestic production, become unable to compete in the world marketplace, and be forced into near-subsistence farming and agriculture only. “Cost-reducing technological change is the product of applied research, which increasingly depends on constantly advancing basic research. Low-income countries that are not rapidly expanding and improving their agricultural research capacity will not experience cost reductions and hence as others reduce costs, and prices decline, incomes of the non-innovators will decline. Nowhere is this more dramatic than in Africa, which has suffered from increasingly efficient production of first oil palm, then cocoa, and now coffee from Asian countries that have been spending on research. Benefiting from research is now far more complex than a few decades ago.” ("Globalization and

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