An affair with the changing world
The United States of America is the most powerful country in the world today. In many cases, it takes center stage in decision-making as far as economic policies are concerned. It is by far the most influential country in the World Trade Organization (WTO). In fact, when the World Trade Organization (WTO) was organized, it was touted by advocates of globalization as providing the legal and institutional support for the new global economy which was largely being pushed by the US and Great Britain. The WTO was then envisioned to serve as the vehicle of an economic process that would bring about the greatest good for the greatest number.
The WTO is actually the third pillar of a holy trinity that would serve as the guardian of the new economic order — the other two being the International Monetary Fund (IMF) and the World Bank. Yet, in spite of the fact that globalization is supposed to improve competitiveness among WTO member countries the main beneficiary of the new global order is really the US. Conceived to be an agent of free trade, the WTO’s most important agreements actually promoted the monopoly for US firms, especially those concerned on intellectual property rights and agriculture.
In fact, it was alleged that when the Asian financial crisis happened to countries that had been thought of by many as America’s formidable competitors, Washington did not save the Asian economies by promoting expansionary policies. Instead, it used the IMF to dismantle the structures of state-assisted Asian capitalism that had been regarded as difficult barriers to the entry of goods and investments from US transnationals that had been long clamoring to get their piece of the “Asian miracle. ” Consequently, it goes without saying that the US is really the most influential country in the world today.
Politically and economically, it is a power to reckon with. Together with the World Bank and the IMF, it has been severely criticized lately for their policies on developing countries. Accused of being controlled by powerful people from the West whose main concern is to protect their interests, the IMF and the World Bank have been urged to institute internal and external reforms. In fact, in an IMF-World Bank summit in Singapore last September, criticisms have been hurled at how the West, most especially the US, has been handling its affair in developing countries, such as those in Asia, Latin America and South Africa.
Nobel laureate Joseph Stiglitz, a former chief economist for the World Bank, has been especially critical on what he calls the “hypocrisy of rich countries professing to want to help emerging nations. ” He accused the United States, among other industrialized countries, of refusing to liberalize import rules on sectors like construction or shipping, where developing countries are particularly competitive.
He insisted that IMF voting rights and leaderships posts – which are dominated by America and Europe — should undergo changes considering that Asia now accounts for almost 40 percent of global income, and an even larger share of its surpluses. The US Economy The US economy has long been regarded as the largest economy in the world, with a GDP for 2005 of 12. 41 trillion dollars. It is the market forces the rule an economy like this while the government practices less interference. Because of this, the U. S. gives its public minimal safety nets.
Thus, the private sector faces considerably less regulation compared with other countries around the world. In more ways than one, the US economic policy follows the doctrines of Keynesian economics. Since the presidency of Ronald Reagan, so-called neoliberal ideals have become the norm in the country. It was then that advocates of globalization started to sprout all over. Unfortunately, the United States economy has dipped from being the world’s largest creditor to having a substantial current account deficit and a national debt.
It now accounts for approximately 64% of the country’s Gross Domestic Product (GDP. US policies on Least Developing Countries The US, in coordinate of the IMF and the World Bank, has instituted many radical policies that were supposed to help the so-called Least Developed Countries (LDCs) around the world. These policies, though helpful in many ways, have been highly criticized because in the long run, it became obvious that more than their recipients, they have served American interests more. One of the most contested US policies on LDCs concerns foreign aid. The U. S.
Agency for International Developments (USAID) history goes back to the Marshall Plan reconstruction of Europe after World War Two and the Truman Administration’s Point Four Program. In 1961, President John F. Kennedy signed the Foreign Assistance Act into law and created by executive order USAID. The USAID’s main objective was to a helping hand to those people overseas struggling to make a better life, recover from a disaster or striving to live in a free and democratic country. However, some radical sectors accuse the American government of subjugating other races in the form of friendly “aid.
” This foreign assistance had reached the foreign shores of Africa and Asia, only to prove its ineffectiveness. The most criticized US policy, however, concerned the country’s bilateral trade deals with developing countries. Among the programs that support this policy are: 1) Generalized System of Preferences (GSP) The GSP program was instituted on January 1, 1976. It provides preferential duty-free entry for more than 4,600 products from roughly 140 designated beneficiary countries. 2) African Growth and Opportunity Act (AGOA)
AGOA extends duty-free treatment under the GSP to Sub Saharan African countries that meet US political and economic benchmarks for around 1,800 tariff line items. AGOA contains special apparel provisions that permit limited duty and quota-free entry to the US market for textiles manufactured in AGOA countries. 3) Andean Trade Preference Act The Andean Trade Preference Act was enacted in 1991. Its main objective is to combat drug production and trafficking in the Andean countries, such as Bolivia, Colombia, Ecuador and Peru. It provides duty-free access for approximately 5,600 products to U. S.
markets. 4) Caribbean Basin Initiative The CBI currently provides 24 beneficiary countries with duty free access to the U. S. market for most goods. It was initially launched in 1983 through the Caribbean Basin Economic Recovery Act (CBERA). In 2000, it was substantially expanded through the U. S. -Caribbean Basin Trade Partnership Act (CBTPA). US and globalization Since its resurgence in the 1980s, Globalization has been heralded as the savior of new world economy. Indeed, the drive for more markets for surplus products and capital has intensified, a more rapid global integration has occurred.
The concept of globalization has found its staunchest ally in the US. However, in as much as many economists fight for the acceptance of globalization as the new world order, criticisms have escalated. These criticisms have been basically hurled against the US, which many thought have devised the scheme to suit its own purposes. For all the doubts and reservations economists have for globalization, it has been proven that it has somehow aided in fast-tracking the growth and development of some of the least developed countries. Its effect on inequality, however, is even more complex.
Because of globalization, inequality has been said to have reduced because even the most populous developing countries have benefited from it. Still, many countries remain poor and economically challenged. Besides, internal inequality in some of these countries continue to perpetrate, leaving the poor even poorer. In defense of globalization, many of the studies conducted along this area have compared a globalized and non-globalized world. In these comparative studies, it would seem that globalization is the best policy to pursue in order to be able to meet international recognition.
To choose otherwise would be to backtrack from progress and from being at par with industrialized countries in the world. “Erecting barriers to the flow of goods, factors, information and ideas, was injurious to welfare and entailed a loss of freedom. Reversing globalization, even if it could be done, would be an enormous setback. Slowing international integration, while it might temporarily protect some groups from competition will often be purchased at high long term costs for the majority.
Frequently the delay in opening the economy does not lead to reforms which strengthen vulnerable sectors or to the creation of safety nets to protect low income groups. Generally reforms are compelled and implemented by having to face a challenge head on. ” On the other side of the spectrum, several studies came out to attack the supposedly miraculous results of globalization: that deregulation of trade and total market freedom are bound to result in the rise of the standard of livings and societies that are fairer for all.
Bernard Cassen succinctly pointed it out when he said: “Instead of reducing inequalities, globalization of trade exacerbates them and does so both between and within nations. In rich countries, like the United States and United Kingdom, no one disputes the ever widening income and poverty gap…the fact is that this gap is no longer a matter of real concern for leaders, some of whom actually argue that inequalities are an essential factor for growth. ” Even the World Bank conceded that globalization is not without flaws.
In one of its studies, it was found out that “while the percentage of the world’s poor has declined, the absolute number of people living in poverty has not. Poverty reduction remains the central challenge in today’s global economy and society. ” Even as the debate on the advantages and disadvantages of globalization continues to rage, so are the thrusts of most governments to lessen their intervention in strategic economic and social sectors and activities to allow more room for so-called market forces to operate.Sample Essay of AssignmentExpert.com