Globalization has many advantages. The consumers are able to get access to a variety of goods from various producers and at a cheaper price. This improves the standards of living of the consumers. In addition, inefficient producers are removed from the market and this ensures quality products that at low costs (Milward, 2003). Therefore efficient allocation of resources is encouraged. In addition, the relationship between countries improves as people from different countries trade. Globalization also enhances technological transfer and this facilitates faster development of the poor economies.
Globalization however has several disadvantages. The effects of globalization are not the same for different people. The employees from the rich countries may be laid off since cheaper labor can be obtained from less developed countries. Erosion of culture is one of the effects of globalization. Spread of diseases becomes very easy due to globalization. The difference in economic growth of countries is common due to globalization since countries that are not able to export much product remain poor.
Free trade is trade whereby the barriers that are imposed against export and imports are eliminated. Tariffs and quotas are minimized to facilitate trade (MacDonald, 2000). On the other hand, four trade is the arrangements in the developing countries to ensure that the goods produced are exported at reasonable prices and also the environmental damage is prevented.
Theory of comparative advantage is used to justify free trade between countries. According to the theory, a country should produce and hence export a product that it has less opportunity costs in production (Maneschi, 1998). A country has a comparative advantage if it uses fewer resources to produce a product as compared to another country. For example, if a country A requires 5 laborers to produce a cloth and 10 laborers to produce a shoe and country B requires 10 laborers to produce one cloth and 5 laborers to produce a shoe. Country A has a comparative advantage in production of clothe and hence should export clothes while country B should produce and export shoes since it has comparative advantage in production of clothes.
G 20 is a group of 19 countries and European Union that control more than 80 percent of the world economies. A group of the finance ministers of these countries and the central bank governors forms the meetings of the G20 countries (Kirton, 2009). Some of these countries include Canada, united states, south Korea, turkey, Mexico, Russia, France, brazil, Germany, Italy, south Africa, Japan, Indonesia, china, Argentina and Australia.
G20 is to hold a meeting in Mexico at Las Cabos. The agenda of the meeting is to put measures in place to facilitate improvement of less developed countries. To facilitate this, the members of G20 with the exclusion of unites states are to increase their contributions of the international monetary fund. This will enable the poor countries to borrow more funds to facilitate development of a country (Carvalho, 2011). Other measures that G20 has put in place to deal with global economic crisis are global control of financial institutions. In addition, countries are to commit themselves in millennium development goals.
The financial crisis in Europe has been given a great attention by the G20. This crisis is to be solved by implementation by various policies. The use of one currency is to remain and the sovereignty of the central banks is to remain. The countries have to reduce their expenditures so that their debt level is reduced. The European countries are to stabilize their fiscal policies as a way of stimulating economic growth.
G20 countries play a great role in the world economy. They form policies that are to govern financial institutions of various countries. These international policies facilitate economic growth of various countries. These countries also give funds to less developed countries through the international monetary fund to facilitate economic growth. The group also deals with various economic problems facing various countries in the world.
References.
Hajnal, P. I. (2007). The G8 system and the G20: Evolution, role and documentation. Aldershot, Hampshire [u.a.: Ashgate.
Kirton, J. J., Koch, M., Group of Twenty., & University of Toronto. (2009). G20: The Pittsburgh Summit : September 2009. London: Newsdesk Communications.
Carvalho, F. J. C. (2011). [The G20. Bonn: Deutsche Gesellschaft für internationale Zusammenarbeit (GIZ.
