Globalization A New Way For International Trade

The world is becoming more and more interconnected and economic activity is becoming more and more globally oriented and integrated. Over the years global relationship and economic activates has been growing. While that sounds promising, globalization is also becoming one of the most debated issues and coming under much criticism. Mostly that is because world trade runs by industrialized countries and big corporations. While globalization can benefit some countries, it could also hurt others. First and foremost, what is globalization? When many countries allow free trade it opens a new way for international trade which leads to globalization. The term globalization is the increase in global relationships, culture, people and economic†¦show more content†¦Whether the demand rises or falls, the international price remains unchanged. Yet, the price of domestic products in domestic supply schedule is directly related with the demand. It is a perfect competition which individual suppliers take the price in the market as given and react accordingly. On the other hand, tariffs in large countries make the foreign supply curve to slope upward instead of making it horizontal line. In the case of large countries like the United States the consumers end up paying more than foreign producers received. And the market price will be at equilibrium with a quantity demanded and supplied at which the price paid by consumers is higher than price received by foreign producers. Again governments and some local producers gain from tariffs in large countries, the consumers loses. Tariffs also hurt foreign suppliers. Tariff forces foreign suppliers to supply less with a cheaper price. These types of restrictions are removed so the foreign industries and local industries can compete with each other without any restrictions in the trade. It is pretty clear that when there is no restrictions there will be imports and the market price remains constant. Globalization of the foreign exchange rate is not pegged, but allowed to change according to Demand and Supply for their currencies. Many believe in the past few decades’ policy and industrial growth of world trade have increased dramatically. Since 1950, for example, the