Please enable JavaScript.
Coggle requires JavaScript to display documents.
The Cost of Economic Instability (Globalization (People in opposition to…
The Cost of Economic Instability
International Trade
Advantages
Makes it easier for a country to be saved from scarcity
A country can sell their surplus to another country, avoiding a change in prices
Provides a wider range of commodities for a country
Disadvantages
If one country relies on another for certain supplies their economy may be strained in times of emergency
It could possibly cause a country to exhaust their material resources
If no restrictions are placed on international trade it can ruin domestic industries
Globalization
People in opposition to globalization say that it makes the rich richer and the poor poorer
Globalization could be improved with better enforcement of the rules. When other countries defy the trade agreements nothing is done
Supporters argue that globalization will better the world and could potentially solve problems such as unemployment and poverty
Protectionism
This can be helpful when a country is try to become strong in a new industry
In the long term, this weakens the industry
This is a politically motivated defense measure
Misery Index
Also called Discomfort Index
This is not an official government statistic
Only relevant over long time periods
Collectivization
Individual farms were forced to combine into collective farms
Peasants that refused collectivization were given harsh punishments including, land confiscations, arrests, and deportations to prison camps
Stalin used this policy in an attempt to overcome the food crisis in the Soviet Union
Privatization
Supporters believe this will lead to reduced taxes and cost cutting
Critics say that private ownership does not necessarily translate into improved efficiency
Beginning in the 1980's Reagan began to encourage privatization of the government
Nafta
It was negotiated by President George H. W. Bush. After being passed through Congress it was implemented under President Bill Clinton
Includes Canada, The United States and Mexico
President Trump plans to either renegotiate or withdrawal from Nafta
European Union
The EU was founded in 1957
The EU start with 6 countries, Belgium, France, Germany, Italy, Luxembourg, and the Netherlands
19 of the 28 countries in the EU use the Euro for their currency
Comparative Advantage
19th Century English economist David Ricardo is associated with this term
Absolute Advantage is a related term. Absolute is when a country is better at production in a specific industry than other countries. Comparative is being the country that is best fit to produce something in an industry in comparison with other industries compared to other countries
The world's output would increase greatly if more countries applied comparative advantage