Question

One argument in the debate surrounding globalization is about the inequality between developed and developing nations. Do you think the recent increase in barriers to trade is a help or a hindrance to reducing inequality? Why? and the whole question should have 500-words.

Answer 1

Answer: The recent increase in barriers to trade is a hindrance to reducing inequality because increase in trade barriers cause a limited choice of products and, therefore, would force customers to pay higher prices and accept inferior quality.

The trade barriers are detrimental and decrease overall economic efficiency. This can be explained by the theory of comparative advantage. In theory, free trade involves the removal of all such barriers, except perhaps those considered necessary for health or national security. In practice, however, even those countries promoting free trade heavily subsidize certain industries, such as agriculture and steel.

Trade barriers are often criticized for the effect they have on the developing world. Because rich-country players set trade policies, goods, such as agricultural products that developing countries are best at producing, face high barriers. Trade barriers, such as taxes on food imports or subsidies for farmers in developed economies, lead to overproduction and dumping on world markets, thus lowering prices and hurting poor-country farmers. So basically, trade barriers generally favor rich countries and tend to be anti-poor, with low rates for raw commodities and high rates for labor-intensive processed goods. As rich countries tend to set international trade policies and standards.

With increased international trade and global capital flows, income disparities between the rich and poor are exacerbated, and industrialized nations grow in power at the expense of under-capitalized countries.

Anti- globalization groups continue to protest what they view as the unethical trading practices of multinational businesses and capitalist nations, often targeting groups such as the WTO and IMF.

Therefore, increase in barriers to trade is a hindrance to reducing inequality.