Your friend does not understand the benefits of globalization. Outline for your friend the positive economic aspects of globalization

Question

What will be an ideal response?

Answer 1

Globalization is the process of countries becoming more open to foreign trade and investment. The increased investment either by foreign direct investment or foreign portfolio investment can give a low-income country access to funds and technology that it might not otherwise have. These funds can help the country invest in factories, machinery, and the equipment needed for economic growth. The extra capital can raise labor productivity, growth, and GDP per capita. Trade and investment can also provide the country with much needed upgrades in technology. One of the lessons of the economic growth model is that technological change is more important for raising productivity than are increases in capital. It is an important ingredient for rapid economic growth. Technological change is an important contributor to long-term economic growth.
The bottom line is that trade and investment can cause standards of living to rise. Indeed, it has been empirically shown that growth and globalization are positively related. With growth in standards of living, the country can break the vicious cycle of poverty. Incomes will grow, the people of the country will be able to save and invest, and this saving and investment will fuel growth from within.