Globalization of the World Economy - Essay Example

Globalization of the World Economy U.S and China are some of the world economies that play significant role in the globalization of world economy by benefitting several other countries in trade. U.S and China are two major economic powers accounting for almost 30% of world domestic product. They the two countries occupy a significant portion of both international trade and investment. Apparently, U.S and China are major actors in the world economy whose impact on the rest of the world is undeniable. Both countries have created more job opportunities because most of their firms expand to the international market thus employing millions of people both in the local and foreign countries. Some of the international companies from both US and China pay higher wages because of their sound financial positions (“Globalization of World Politics” 250-265) Moreover, both U.S and China have higher disposable income that increases their rate of consumption. Through globalization, most poor countries have experienced rapid economic growth rate and per capita income; it is a sign of international economic integration that has contributed to success of many countries including US and China. “Globalization of World Politics” explains that U.S and China are some of the beneficiaries of globalization although their success is attributed to the policies of individual countries towards globalization (252-259). Availability of disposable income in both US and China has a great impact on the two countries GDP and international relations. Because China and U.S households earn higher salaries that they can spend and save, GDP goes high because of increase in consumption. China and U.S are world’s major importers and exporters that trade with almost every country across the globe because of their economic capabilities. Moreover, U.S and China have heightened output and contend with both huge domestic market and foreign markets that compel them to seek partners and improvement in employment. Advantages triggered by economies of scale and rapid growth of professionals play an important role in globalization of world economy. China and U.S have technical knowledge, expertise and enough resources that enable them trade with other countries across the world. China and U.S enjoy rapid positive changes in their economies thus creating numerous opportunities for both locals and foreign investors. Many entrepreneurs have strived to make their ways in China with different investment intentions that include creating partnership with Chinese firms (“Globalization of World Politics” 253-257). These two countries have worked hard by adopting policies that can see them succeed in the wider market that has been brought about by globalization. “Globalization of World Politics” argue that China and U.S have maintained steady growth in tourism, transportation, cross border fields in construction, communications, insurance, information, and finance (255-263). China for instance, has experienced a more than fivefold growth in her service industry for the last 10 years. The foreign trade development of China has greatly influenced her modernization especially her technological process and industrial upgrading. Foreign trade has employed over 80 million people with better income and living standard (“Globalization of World Politics” 257-263). Moreover, China and US have created a leveled playing ground through provision of flexible fair and stable market for international investments and trade through good legal practices. They are also committed to the WTO that has given them greater advantage in the foreign trade. China and U.S reforms and opening up for economic globalization have enhanced the rate of economic growth as well as propelling the world economic performance. U.S and China’s foreign trade have enhanced their national welfare as well as their trading partners and accelerated their integration in the world economy. Foreign trade have widened market for U.S and China’s trading partners through increase in productivity and they grant great access to the least developed countries. Mutual dependent model of the economic relationship between U.S and China are sustainable. Trade relationship between U.S and China is very solid and mutually gainful and is integrated trough trade in both goods and service (MacEwan 135-140). The two countries act as large market for each other’s exports as well as great sources of imports and are closely connected via capital flows. China has been a primary foreign source of financing US debt and a major source of foreign private portfolio and direct investment in U.S. China imports raw materials, machineries, automobiles, and manufactured goods from USA. On the other hand, China exports manufactured goods and automobiles. There has been some trade deficit for the US goods and services between US and China since exports were more than imports (MacEwan 156-163). Some of the main U.S exports to China include coarse grains, wheat and soybeans as well as private commercial services such as travel and royalties. Moreover, China has supplied vehicles, machinery, electrical machinery, optic and medical instruments, snack foods, wine and beer as well as processed fruits and vegetables. U.S has also imported some private services from China such as freight services, royalties, and licenses. Bilateral trade between China and USA is of great help to both the countries. Both China and USA have well educated workforce producing some of the best products (MacEwan 157-162). The need to produce sufficient export for USA has however had some effects on the employees by introduction of longer working hours. It is apparent that the relationship between USA and China has both direct and indirect effect. There has been an increase in demand for worker hours in China’s export thus reducing work hours required for domestic production. U.S has many investment projects in China enabling it to make a lot of profit. U.S makes a lot of profit by investing in china compared to any other country (MacEwan 160-164). The rapid economic growth is greatly stabilizing the China-U.S relationship. Additionally, China has really aided U.S during the international financial crisis thus enabling U.S to tackle the crisis easily. Most of the manufacturing companies from U.S have explored the Chinese market that has provided them shelter during the global financial crisis. The China’s consumer products have helped in controlling the U.S price index thus ensuring good value for money. The labor intensive products greatly assisted the American consumers by keeping the cost of living down amid financial constraints. Being that U.S agricultural sector is one of the most productive sectors in the world, China provides the best market for these products. Works Cited Globalization of World Politics: An Introduction to International Relations. S.l.: Oxford University Press, 2013. Print. MacEwan, Arthur. Economic Collapse, Economic Change: Getting to the Roots of the Crisis. Armonk: M.E. Sharpe, Inc, 2011. Internet resource. Read More