Essay: Counter-effects of globalization

13 May

Essay: Counter-effects of globalization

Sample Essay

There are various counter-effects of globalization in that inflation is also one of the causes. This is because the more liberal the trade regime is in the country, the more prone it is to inflation as argued by Scott C. Bradford, Paul L. E. Grieco, and Gary Clyde Hufbauer,

Arguments can be made in both directions about the connection between trade openness and inflation. On the one hand, greater openness increases a country’s exposure to foreign inflation generally and to industry-specific shocks, such as a surge in oil prices.

When prices rise worldwide, an open country is more vulnerable, through higher import and export prices. On the other hand, increased trade openness reduces the power of domestic producers to raise prices and may permit a country to “export” its own inflationary policies (easy money and fiscal deficits) by borrowing from foreign capital markets. (Scott C. Bradford, Paul L. E. Grieco & Gary Clyde Hufbauer n.d.)

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