Question: Do the benefits of globalisation outweigh the costs?
Globalisation may lead to increased global income. Income rises across the globe because economies can access larger markets, specialize in their comparative advantage and trade more. Income also rises because technology and knowledge is transferred, increasing productivity.
Conversely, globalisation could cause increased global income inequality. Rich countries get richer whilst poor countries get poorer because of declining terms of trade and primary product dependency. But, poverty seems to be falling all over the globe.
Furthermore, globalisation may lead to lower prices. A good is produced in the country that has a comparative advantage for that good, so goods are produced efficiently and can be sold at a low price. Also, countries can import advanced technology from around the globe and produce even cheaper. Transport costs are low so other countries can import the good cheaply.
But, prices may, instead, rise. Globalization causes world incomes to rise, so demand for goods increases and prices increase.
Globalisation could help improve the environment. If rich countries transfer green technology to LDCs then damage to the environment is reduced and economic growth may become sustainable.
On the other hand, globalisation may lead to more environmental damage. Increased world trade means increased pollution, the environment gets damaged more and global warming increases. Moreover, more goods are produced so more resources are used, more oil is extracted and more land is cultivated.
Moreover, globalisation may create harmonious political ties. The prospects for mutually beneficial interdependent trades may foster more harmonious political relationships between economies.
Although, globalisation may lead to the loss of political sovereignty. An economy loses political sovereignty if it signs an international treaty or joins a monetary union or trading block.