Macroeconomics
Human beings are faced with a big challenge of balancing between their insatiable needs and limited resources. The same case applies to the management of public resources where a government has to determine the areas that they would allocate their resources first. In this case, different countries chase after their different needs and those of their people, in order to determine the way they would allocate the resources available to them. Due to the increasing interaction between nations, globalization has become a pronounced concept all over the world. Countries interact more with each other in bilateral trades, where each country uses its political muscle to get the maximum resources that they can get from any given trade deal. In this case, every country develops its trade policy which is used in negotiations. This paper will analyze an article Globalization Gets a Bum Rap, But Foreign Investment in U.S. Hits a Record High, published in the Wall Street Journal on 20th June 2016.
The article expresses the state of affairs where several European countries have dropped in their earnings while the United States has seen her foreign domestic investment reach the highest they ever got since the 2008 recession. The author highlights that despite this trend, there was reduced exports to Europe. Foreign Domestic Investment increases when the investment environment within the country is good. This article, therefore, shows that the foreign policy in the United States was better than that in Europe. In fact, the article highlights that the US increase in FDI could have been at the expense of the same in Europe. As the article states, globalization in the present case seems to flop and its existence has had negative effects on the economy. The ease of moving investments was necessitated by this concept and the trade policies for both the home country and the country of investment. In this case, globalization has led to better performance of the United States economy, while the opposite has happened among European countries. Through SelectUSA, president Obama has used globalization to reach out to other countries, wooing investors and increasing the attractiveness of the economy for investment.
Globalization has led to ease in movement of resources from one region to another, including human resources. Countries with better trade policies are able to attract investors. The United States trade policies allow international companies to operate within the country, including directly trading with them Due to this, the article points out that the FDI have ventured more into manufacturing and has taken up a big role in employment, where one in every seven employment opportunities are related to the private sector. Despite the seemingly attractive trends in the United States, not every policy maker or citizen is happy about the situation. Some feel that the investors are only venturing into the United States because the economic environment in their respective countries was hostile and that they would withdraw their investment one the said environment became better. This argument shows the pros and cons of globalization depending on how the trade policy of the host country is framed.
Globalization is either beneficial or harmful to an economy depending on the way in which the country has set up her trade policies. Some policies might disadvantage a country while others might advantage it in a big way. The United States has carefully aligned her trade policies in a way that they benefit as other countries suffer. Although this is a seasonal phenomenon that swings back and forth, the United States has maintained her economic supremacy. With emerging economies such as China pushing for supremacy, their policies do not help them in improving their performances.
