Question=Evaluate the validity of the argument that "globalisation will profit every nation and raise their living standarts."( Fernald,J. And Schall,J.V ).
In Fernald's essay "The Fall And Raise Of The Global Economy", the author argues that trade liberalization makes nations more prosperous. He claims that globalisation in a developed or a developing country provides a lot of advantages. Although their arguments seem to be good and valid for a few countries they are based on unreality. This paper aims to evaluate his arguments that "reducing tariffs, export subsidies and eliminating quotas increases global income and that openness to the world makes us more prosperous." (Fernald,John G ) In my essay, I shall argue that especially in developing countries quota elimination, openness and tariff reduction decrease the income. .
Fernald's basic argument is that opening domestic markets to global capital can improve living standarts. This leads to receiving capital inflows and foreign diresct investment in order to develop quickly. Hence, these are necessary to have high incomes.Nevertheless, 75 percent of the total stock and 60 percent of the flow of FDI (foreign direct investment) .
stayed in the most powerful regions e.g. in North America, European Economic Area and Japans. These countries make powerful pressures over financial markets and other economic tendencies. So global market does not mean regulation and control, it means limtation of developing countries by the great powers and the economic doctrines which are prevalent among their elites ( Hirst and Thompson , 1996 ). .
He makes a sweeping generalisation when he says openning domestic markets leads to prosperity. Yet, according to Mahattir Bin Mohamad (2002) it is too dangerous to invite the free market of global foundations to the developing countries. Globalisation is a trap for these nations, because the govenments cannot control their own future and it can also damage prosperity.