rewrite
dior999
originalpaper.docx
Economic growth is slowing down
Globalization contributes many advantages to the global economy. The global boom is the result from globalization. Economy had a rapid growth after 1990s. But the globalization also carries some problems to the economic. As a result, the economic growth is slowing down in recent years.
In the article The steam has gone out of globalization, the author states that the globalization is leading our economy to a new era called “slowbalisation”. The economy has a robust growth during the golden age of the globalization in 1990-2010. But the economic growth rate become slower in recently years because the benefits from the globalization is almost used up. The cost of shipping has stop falling, multinational firms find a hard time survive in both global markets and the local markets. Meanwhile activity is shifting towards service, which is harder to trade across the borders. Those are the factors cause the slowbalisation. And globalization remains many issues that slow the economy down in the recent years.
First, the decline of the total investment in the market caused the economic growth to slow down. Investment is a very significant factor that effect the long-term aggregate supply. If the long-term aggregate supply doesn’t increase, the rise in the aggregate demand will cause inflation but not economic growth. Moreover, the high geopolitical risk makes firms unwilling to put investment in countries and industries that carry high risk. In the article, “global value of cross-border investment by multinational companies sank by about 20% in 2018” (Slowbalisation, page 2 para 3). And the decline in the payoff of from the investment also slow down the economy. Globalization bring the production cost significantly lowered than before. But after the cost of shipping has stop falling and the labor cost can not be reduced, firms can not lower the production cost anymore therefore lower the total payoff from investment. This means a country need to put more money in the investment in order to reach the same economic growth as before, which is not sustainable (Ip).
Since the benefits from the globalization become less significant, trade conflict between two countries become more ordinary in recent years that reduce the chance of cooperation in economic and slow down the economic. Country like the United States is now putting more attention to the domestic economic growth rather than the global economic growth. Trade conflict between U.S. and China is the trigger for the latest slowing (Ip). Moreover, the high tariff set by the U.S. government even hurt its small domestic business because of the increasing cost in production (Guo). As a result, trade behavior between countries will become more regional.
The divergent monetary policies between America and the rest of the world will hurt the economy in the emerging markets. The Federal Reserve has already raised the interest rate 8 times while the European Central Bank has no plan to rise their interest rate (The world economy, page 1 para 3). And China on the other hand, is having relaxed monetary policy in order to offset the outcome from trade war. The current situation that strength the dollar in the world and makes it harder for emerging markets to repay their debts (The world economy, page 1 para 3). A measurement indicates that emerging markets account for 59% of world’s output. Therefore, a financial crisis in the emerging markets will definitely slowdown the global economy and even lead to a recession.
In conclusion, decline in investment, trade conflict and the crisis in the emerging markets are some of the problems carried by the globalization when its benefits the economy less than before. And the global economy is stagnating because of that.
measures of global integration
From this chart we can see eight measures of GDP are in retreat or stagnating.
Works Cited
Ip, Greg. “The Global Boom, Barely Begun, May Be Over.” The Wall Street Journal, Dow Jones & Company, 24 Jan. 2019.
“The Steam Has Gone out of Globalisation.” The Economist, The Economist Newspaper, 24 Jan. 2019.
“The next Recession.” The Economist, The Economist Newspaper, 11 Oct. 2018.
“Globalisation Has Faltered.” The Economist, The Economist Newspaper, 24 Jan. 2019.
Yuwei Guo. “slowbalisation” Economic Rhetoric: Using Economic Theory and Empirical Evidence in Arguing Policy. UC Santa Cruz. Santa Cruz. 23 January 2019. Lecture.
