GLOBALIZATION

IDENTIFY THE WORDS THAT HAVE A MISTAKE AND THEN WRITE THEM IN THE CORRECT WAY

Globalisation

For good or ill, globalisation has become the economic buzz-word of the 1990s. National

economies are undoubtedly becoming steadily more integrated as cross-border flows of trade,

investment and financial capital increase. Consumers are buying more foreign goods, a growing

number of firms now operate across national borders, and savers are investing more than ever

before in far-flung places.

Whether all of this is for good or ill is a topic of heated debate. One, positive view is that

globalisation is an unmixed blessing, with the potential to boost productivity and living standards

everywhere. This is because a globallyintegratedeconomy can lead to a better division of labour

between countries, allowing low-wage countries to specialise in labour-intensivetasks while high-

wage countries use workers in more productive ways. It will allow firms to exploit bigger

economies of scale. And with globalisation, capital can be shifted to whatever country offers the

most productive investment opportunities, not trapped at home financingprojects with poor

returns.

Critics of globalisation take a gloomier view. They predict that increased competition from low-

wage developing countries will destroy jobs and push down wages in today's rich economies.

There will be a "race to the bottom" as countries reduce wages, taxes, welfarebenefits and

environmental controls to make themselves more "competitive". Pressure to compete will erode

the ability of governments to set their own economicpolicies. The critics also worry about the

increased power of financial markets to cause economic havoc, as in the European currency crises

of 1992 and 1993, Mexico in 1994-95 and South-East Asia in 1997. Despite much loose talk about

the "new" globaleconomy, today's international economicintegration is not unprecedented. The

50 years before the first world war saw large cross-border flows of goods, capital and people. That

period of globalisation, like the present one, was driven by reductions in trade barriers and by

sharp falls in transport costs, thanks to the development of railways and steamships. The present

surge of globalisation is in a way a resumption of that previoustrend.

That earlier attempt at globalisationterminated abruptly with the first world war, after which the

world moved into a period of fierce trade protectionism and tight restrictions on capital

movement. During the early 1930s, America sharply increased its tariffs, and other countries

retaliated, making the Great Depression even greater. The volume of world trade fell sharply.

International capital flows virtually dried up in the inter-war period as governments imposed

capital controls to try to insulate their economies from the impact of a global slump.

WRITE THE WORDS

Globalisation

For good or ill, globalisation has become the economic buzz-word of the 1990s. National

economies are undoubtedly becoming steadily more integrated as cross-border flows of trade,

investment and financial capital increase. Consumers are buying more foreign goods, a growing

number of firms now operate across national borders, and savers are investing more than ever

before in far-flung places.

Whether all of this is for good or ill is a topic of heated debate. One, positive view is that

globalisation is an unmixed blessing, with the potential to boost productivity and living standards

everywhere. This is because a globally integrated economy can lead to a better division of labour

between countries, allowing low-wage countries to specialise in labour-intensive tasks while high-

wage countries use workers in more productive ways. It will allow firms to exploit bigger

economies of scale. And with globalisation, capital can be shifted to whatever country offers the

most productive investment opportunities, not trapped at home financing projects with poor

returns.

Critics of globalisation take a gloomier view. They predict that increased competition from low-

wage developing countries will destroy jobs and push down wages in today's rich economies.

There will be a "race to the bottom" as countries reduce wages, taxes, welfare benefits and

environmental controls to make themselves more "competitive". Pressure to compete will erode

the ability of governments to set their own economic policies. The critics also worry about the

increased power of financial markets to cause economic havoc, as in the European currency crises

of 1992 and 1993, Mexico in 1994-95 and South-East Asia in 1997. Despite much loose talk about

the "new" global economy, today's international economic integration is not unprecedented. The

50 years before the first world war saw large cross-border flows of goods, capital and people. That

period of globalisation, like the present one, was driven by reductions in trade barriers and by

sharp falls in transport costs, thanks to the development of railways and steamships. The present

surge of globalisation is in a way a resumption of that previoustrend.

That earlier attempt at globalisationterminated abruptly with the first world war, after which the

world moved into a period of fierce trade protectionism and tight restrictions on capital

movement. During the early 1930s, America sharply increased its tariffs, and other countries

retaliated, making the Great Depression even greater. The volume of world trade fell sharply.

International capital flows virtually dried up in the inter-war period as governments imposed

capital controls to try to insulate their economies from the impact of a global slump.

WORDS IN THE CORRECT WAY

1. GLOBALIZATION

2. LABOR

3. SPECIALIZE

4. AT GLOBALIZATION TERMINATED

5. PREVIOUS

6. TREND