Economic Globalization: Time to Make It More Inclusive

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Economic integration promotes economic growth

  • Lower trade barriers increase the international division of labour and by this the production possibilities.
  • Cross-border exchange of labour and capital results in higher overall productivity, because these factors of production are used in the regions and companies where they can produce the largest value added.
  • Producing for a global market reduces the costs per unit due to the advantages of mass production.
  • Increasing competition with foreign companies forces suppliers to reduce their costs of production via technical progress.

Economic integration is changing prices in all countries

International trade is changing wages in all countries

Economic Globalization — Who wins, who loses?

  • The most important instrument is the tax and transfer system.
  • In addition, it is necessary to promote a more equal distribution of opportunities and capabilities, for example, by providing further training programs for workers so as to facilitate their transition to industries which are benefiting from globalization.
  • Moreover, governments could use special funds to support companies or regions to adjust to the structural changes caused by globalization. Examples for such funds are the U.S. “Trade Adjustment Assistance” and the “European Globalization Adjustment Fund”.

Conclusion and outlook




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Global & European Dynamics

Global & European Dynamics

Our mission on this blog is to shed light on Europe’s role in the world economy.

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