Globalization: An Argument For Limited Protectionism Essay

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Abstract Globalization has changed the way that everyone conducts business. Throughout history, man has constantly increasing its scope from a local agrarian economy, to cottage industries, to domestic industry, to the newly globalized international framework of commerce that exists today. This progression is quite logical, as it ever increases the efficiency at which products are produced and services are rendered. However, when put in context, the theoretical maximization of efficiency may have dire consequences on independent nations. The over specialization of nations' industries, in the effort of globalization and efficiency, also has the effect of reducing internal commercial infrastructure. This paper examines economic …show more content…
(This paper will assume that the basic supply and demand functions are understood). Using these basic supply and demand functions, consider an example on a national level. For the "Widget" product, country A has a specific supply X and demand Y, which results in price P. However, country B produces widgets as well. Country B, though, has more natural resources specific to widget production than country A. Country B's supply increases, and according to the laws of supply and demand, price declines (Price P'). Country B's lower price P' makes that product more attractive. Consequently, country B's widget, in using a more locally available and more easily extracted resource, is more market efficient as well. In general market theory, country B trades its widget with country A, who in turn then reduces production of its widget which frees up its labor force for other endeavors, such as widget service companies. The preceding example gives a very basic understanding of free trade and market efficiency equilibrium. In reality, situations are never such simplified black and white scenarios. Also, one must consider that although these economic principles are being spoken of in terms of nations, each nation is composed of many thousands of privately owned organizations (In capitalistic societies—the same could be said for

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