International Economics and United States Essay

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Words: 2418
Pages: 10

What Is the Role of Globalization in Creating Global Economic Imbalances and are They Sustainable? Nowadays the term globalization is not unfamiliar to everyone though you may not know how to define it. With the development of economy and technology, globalization has becoming an increasingly popular and evitable trend in every aspect of our life and bring us a lot of benefits and convenience. However, globalization is a "double-edged sword; it promotes the rapid development of global productivity and the world economic growth, at the same time, it brings national and global social and economic problems, intensifies international competition, increases international speculation and causes severe impact on national sovereignty and national industries in developing countries. The most outstanding impact is that it creates and aggravates the global economic imbalances mainly reflects in global trade. The global economic imbalance under the circumstance of economic globalization has certain sustainable features and it won’t end up unless countries stop participating in the global which is almost impossible.
1 Globalization Globalization is an umbrella term for a complex series of economic, social, technological, cultural and political changes seen as increasing interdependence, integration and interaction between people and companies and also the countries in disparate locations. It is a broad concept which includes economic globalization, political globalization and cultural globalization and the most outstanding is the economic globalization. Economic globalization refers to the free flow and optimized allocation of factors of production in the global scope which integrate countries and regions into one global market. On the one hand, the world’s economy are intertwined in all countries and regions and they mutually influence each other and integrate themselves into a unified whole, which forms a "unified global market". On the other hand, it establishes the global rules of standard economic behavior on which basis it builds the market economic operation mechanism. Economic globalization includes the globalization of production, market, capital, science and technology development and application and the information dissemination, etc. Among them, the globalization of production is the main characteristic in economic globalization. The development of multinational companies is the most outstanding reflection of economic globalization and the intensifying trend of regional economic collectivization is the main sign in economic globalization.
2 Global Economic Imbalances In 2005, the former IMF President Rodrigo de Rato firstly official put forwarded the concept of "global imbalances” which is “the constellation of large deficits in one country, with counterpart surpluses being concentrated in a few others " 1. Rato judged that the main reflection of the global economic imbalances is that the US has large current-account deficits, rapid increasing debt while Japan, Germany, China and major emerging Asian markets hold a large trade surplus against the United States. Ahearne, etc. further points out that the essence of the current world economic imbalances is: on the one hand, there are huge trade deficit in the United States, on the other hand, Asia and some oil-producing countries have huge trade surplus, while the euro zone countries, plus the Great Britain basically realized the current account balance. Gruber argues that the world economic imbalances, in addition to the current account imbalances, it also includes international capital flows caused by current account imbalances between the major economies, which then leads to the imbalances in capital and financial account. Seen from the above definition, the world economic imbalances is originated in the United States, and mainly exists between the United States and major developing economies in Asia at the aspects of trade imbalance