Introduction (250 words)

Relevance of the topic and aim of writing

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Introduce keywords;

Globalisation: worldwide expansion of markets.

Ageing population: fall in death rate (longevity) , rise in share of elderly in population.

Capitalism: corporations are privately owned by “fat cats” for profit and all decision are made privately.

Absolute advantage: where two countries are producing the exact same product however one has advantage over the other (unspecified reason) and is able to produce same amount with less resources.

Comparative advantage: if one country is able to specialise in all goods then they should focus on the goods that have the greatest comparative advantage and let other countries produce commodities with the smallest comparative advantage thus benefiting both countries and still allowing specialisation (e.g. China) .

Primary commodities: raw resources used to make secondary commodities

Secondary commodities:  made using primary and manufactured

Factor endowment: commonly understood as the amount of land, labour, capital, and entrepreneurship that a country possesses and can exploit for manufacturing.

Imperialism: a policy of extending a country’s power and influence through colonization, use of military force, or other means. Marxist focus mainly on economic relationship rather than political

Dependency theory:  the idea that resources flow from less developed countries into developed countries, ‘enriching the latter at the expense of the former’ (diagram?)

Colonialism: the expansion of political power over other countries i.e. British empire

Prebisch-Singer hypothesis: theory by Raul Prebisch and Hans Singer, entails that primary commodity exporters should strive to diversify their own economy (industrialise)  and focus less on primary goods exports, this is because over time trade for primary commodities to manufacturing countries can sometime deteriorate and become less valuable to primary commodity producing countries.

Monopoly: the exclusive possession or control of the supply of or trade in a commodity or service

Asymmetric information: market information that many give one person/business and advantage over another, e.g. distribution contacts.

 

 

Neo-classical views + analysis (500 words)

Theoretical attributes explained

Cases to back up these attributes

All referenced

Globalisation is good, free market capitalism can be delivered all over the world

–       Adam smith, glob is good for countries as they are able to focus on producing and developing goods that they specialise in (see absolute advantage).

–       David Ricardo, (see comparative advantage) advanced colonies should produce secondary commodities and less advanced should produce primary, 19th century idea.

–       Hecksher & Ohlin, (20th century refinement of Ricardo), factor endowment should play a part, developing countries are abundant in labour so makes sense for them to produce primary commodities, developed countries are abundant in capital so should produce secondary commodities. Born from this was the term “international division of labour”

–       Glob is not only good for producing goods but also the economy, it drives domestic companies to become more efficient due to the threat and also provides know how on how to reduce costs, these high growth rates can be linked to open trade and investment. (see world trade organisation).

–       John Williamson (Washington consensus, 1989), a set of ten policies with neo-classical view that would create the ideal environment for countries to prosper and grow. Major international institutions based in Washington D.C. (IMF, World Bank, US Treasury) agreed on a package of reforms needed for economic growth. The package was a success as not only did it work for developed countries but also less so. Many events happened after 1989 that reinforced the the only way was the “road to the markets” and when Latin American countries needed bailing out by the IMF (international monetary fund) the were bailed out on one condition that the adopt these policies.

Socialist/Marxist views + analysis (500 words)

Theoretical attributes explained

Cases to back up these attributes

All referenced

Globalisation is bad, countries, cultures, economies and governments are too different glob only benefits the elite. DEPENDENCAY TRADITION (DIAGRAM???)

–       Karl Marx, the social system of capitalism is very unequal and access to capital and political power is in the hands of the few. During capital growth conditions for labourers often deteriorate, social revolution would lead in a seize of power and the workers would run things in the interests of the whole society.  

–       Later on in Marx’s life he thought capitalism could cause more problems and lead to imperial masters for the less developed countries. Creating a huge divide in wealth

–       Globalisation has turned rivalry between firms into rivalry between nations with countries imposing tariffs for their home firms in order to gain global completive advantage. Rapid expansion in colonies would be backed up by military support as needed, conflict between empirical leaders was inevitable as seen in WW1 1914. During the inter war period capitalism showed to increase poverty of the many and colonial powers struggled with control.

–       With a history of colonialism often some economies were left with a gearing to exporting primary commodities and therefore had no access to the world market in any other position. Within 3rd world countries even the businesses that exist there are controlled by the one percent and often this one percent has a collusion with foreign multinationals or even has foreign commercial interests further damaging the economy.

–       Another part of the dependency tradition states that the markets are very far from free and somewhat discriminatory, leading countries can overshadow supranational governing bodies and adjust the framework to best suit them through laws and such.

 

Structuralist views + analysis (500 words)

Theoretical attributes explained

Cases to back up these attributes

All referenced

Globalisation is good however an institutional framework is needed to minimize dangers.

–       Amartya Sen, noble prize winner, believed that after the WW2 when many countries regained political power after colonialism, they had yet to be industrialised and needed to be had the wanted to join the world market, but they could not do it under the same policies that developed countries had done it by years ago as the world system was no longer a ‘level playing field’. Non-market (political and social) policies were then made to rapidly industrialise these countries so that their economies could be integrated into the world market.

–       Agriculture in LDC’s is often pushed by the government and is used as investment in industry, many countries look to their government to own or at least have a substantial role in the industrialisation process, through key industries such as steel, iron and transport.

–       Import substituting industrialisation, whereas there would be less foreign imports and a focus on domestic production instead to keep money in the country, this could be helped by the government implementing tariff and non-tariff barrier, as well as industrial licensees. This additional revenue could be uses to invest in foreign technology, this money can be made through the distribution of primary commodities, in order to maximise these revenue streams the exchange rates could be inflated and capital accounts were kept control of to keep money in the country’s economy.

–       The policies outlined are argued to have flaws and strengths but can be agreed upon are created for LDC’s with genuine structural weakness. LDC’s are often at risk of volatile export prices due to the availability of the raw resources they produce from.

–       Prebisch-Singer hypothesis, outlines the problem for primary good exporters.

–       Many developing countries have a strong economic base due to their ability to produce essential food commodities such as cotton, coffee, fish and bananas, alongside this they also have raw resources like diamond and other are earth metals that can be used in IT devices, again these items are always in dmenad however prices for these commodities can tumble putting pressure on the producers.

–       Monopoly powers thrive under this framework as we see those countries that produce the more valuable commodities have more power and will often merge or takeover other corporations to become huge, often multinational, powerhouses that seek to control supply  therefore controlling prices.

–       Another problem is that as global income increases people are spending more money on secondary commodities, it is because of this that many secondary commodities producing domestic industries implement price support mechanisms, tariffs and subsides for their secondary commodity producers, e.g. English farmers milk. This makes it very hard for small scale secondary producers in LDC’s to compete or even enter the global market and expand through exportation.

–       Joseph Stiglitz, believes that some people in markets have asymmetric information over others thus giving them and advantage in the market. This could mean that farmers for instance don’t have the resources to sell directly into the market and have to go through intermediaries costing them more money to get into the market.

–       Critics of Structuralist views believe many policy mistakes were made however van agree that for globalisation to be inclusive the structural weaknesses outlined need to be addressed.

–       Structuralist writers are against neoclassical ways of thinking through reference fo the Washington consensus arguing that it is not realistic for developing countries to achieve these goals nor does it give specific guidelines as to how these policy’s should be carried out i.e order and time. Also the WC automatically assumes that countries have the necessary framework to carry out these policies which is not the case in most LDC’s, a ‘one size fits all’ method is simply not functional on a global scale.

–       Before the 2008 financial crisis there was talk that the WC was where we would LIKE the economy to end up however it did not mention the implication of frame works needed in LDC’s to bring about the appropriate economic environment for each individual country knowing that each country would be unique

Conclusion + comparison (250 words)

Synthesis of main findings

Comparison, all of the perspective believe capitalism has expanded on a world scale, what divid

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