International Business Assignment - Essay Example

For instance, Ricarodo-Millian viewpoint indicated, not only did the United States make productivity gains by free trade with Eastern nations even the Eastern nations were able to improve their per capita income, though only up to a fraction of the United States’ per capita income. Moreover, free trading nations could harness the potential of each other’s strengths in exchange for weaknesses. This concept emerged from the way United States traded for certain products, like agricultural produce and manufacturing, with Eastern nations that had huge potential for production of these items, it also exported electronic and technical goods to the Eastern nations that were relatively less evolved in terms of those goods.

Classical economics about free trade proposes that such trading actually nullifies all potential imbalances that would eventually follow increased trading between nations. As per Ricardian principles, unemployment is temporary. However, this temporary phase cannot be defined as the US labor force has been experiencing job losses for more than 3 decades, which started when the US started free trade with neighboring nations through the NAFTA during 1994 by outsourcing manufacturing jobs to Mexico (Iyer, 2005).

This resulted in loss of more than 750,000 jobs in the US. Considering that the same scenario continued with other NAFTA members such as the Philippines, Canada, and some European countries. This resulted in an increased number of exports from these countries into the US, thereby addressing all their economic deficit issues. Following job losses in the manufacturing units of the US, even the service industry began outsourcing jobs to Eastern developing countries like India. This increased job losses for most of the IT and IT enabled service personnel in the US.

These shifts in economics and labor markets from economics perspective resulted in bringing about balance between different nations in terms of growth, GDP and per capita income. Samuelson (2004) asserts that free trade has only lowered the labor-market by clearing real wages because the market moved to places with high supply of labor at lower wages. However, Giddens (2011) points out that the global electronic economy provides such opportunities to individuals at one corner of the world to actually shake up what once seemed as rock-solid economies.

Globalization has pushed many economies downwards by pressurizing local autonomy, as incase of the US and European companies. Some economists believed that job losses would not render people of the rich countries to be idle, but would push them harder towards new inventions, which would benefit their economy. Although inventions have happened in the US, these inventions were insufficient to provide jobs for all jobless people; this further increased economic inequalities in rich nations, like the US, too.

Free trade policies have undoubtedly improved living standards of most of the people in developing nations, which has thus resulted in an increase in consumption, costs, and demand for manufactured products, natural resources and agricultural produces. Most of the developing nations have liberalized regulations on foreign direct investment, which has given greater push for retailers to expand into newer