e. semi-developed) and those with less than $1,500 per capita income (i.e. underdeveloped), such as found in most of Asia, Africa and South America.
The vast differences between advanced and underdeveloped nations can also be placed into three groups of nations-first, the industrially-advanced market economies, dominated by the U.S., Europe and Japan; second, the centrally-planned economies, comprised of Russia and the People's Republic of China, and lastly, the so-called Third-World countries which are semi-developed or underdeveloped. According to Jeffrey Haynes, "the current industrialized market economies with less than 18% of the world's population generates about 62% of world output" and although the U.S. makes up about 5% of the world's population, "it enjoys about 22% of world output." In contrast, Third-World nations with about half of the world population, "generated only about 15% of world output, while the Indian subcontinent with over 15% of world population, produced about 1% of the world's output" (156).
In relation to economic globalization, the income gap between those who are affluent and those who are poor appears to be widening. Although the per capita GNP's of advanced and underdeveloped nations have been expanding at about 3% annually over the last thirty years, the fact that the income base in advanced countries is initially higher causes the income gap to increase, meaning that economic globalization is often a good thing for advanced nations but a bed thing for semi-developed or underdeveloped nations.
For many Third-World countries, the various populations are made up of highly diverse ethnic groups which in recent times has created much warfare between these groups based on ethnicity and often religious differences, such as in certain African nations and some in Central Europe. A good number of these nations have large deposits of oil and other valuable natural resources, but many do not which only creates more divisiveness between Third-World nations. Also, a good number of these nations must deal with problems related to a growing population. Some have political and social stability, while others experience unrelenting political and social turmoil. National tradition and identity also play major roles in the overall economies of these nations. Yet despite these conditions, many Third-World nations have achieved economic progress which has greatly influenced their ability to be part of globalization. For example, the island nation of Taiwan, with its on-going debate with China concerning its sovereignty, is one of the leading producers and exporters of electronic equipment, due to the Taiwanese government's awareness that Taiwan can only survive and prosper in the global market by providing high-demand products for the rest of the world.
Thus, it is clear that world trade is a significant component of economic globalization. In regard to the United States, the volume of its international trade has greatly increased, and since the late 1960's and the early 1970's, the export and import of foreign goods has almost doubled, yet the U.S., in today's economic scenario, accounts for a diminishing percentage of total world trade. At the same time, world trade has increased even more substantially for other countries. Therefore, economic globalization appears to have decreased America's ability to export more of its products and commodities, due to competition from other advanced nations and the creation of many international agreements related to global trade, such as GATT and NAFTA.
According to C. Fred Bergsten, over 20% of U.S. industrial output is now exported and one out of every six U.S. manufacturing jobs produces products specifically aimed for export. Two out of every five acres of U.S. farmland produces food aimed for export to other nations. In addition, "almost one-third of the profits of American corporations are derive from their exports and foreign investments, while imports meet more than one-half of the U.S. demand for half of the most important industrial raw materials" (12).
In light of these facts, the United States seems to be greatly dependent upon other countries for many essential products, such as various kinds of fruit, coffee, tea, silk, tin, natural rubber and diamonds. Also, imported goods from other nations compete strongly in many American markets, items like Japanese cameras, DVD players, stereos, televisions and computers; Italian and French wines; bicycles from England, Germany and Italy, and Japanese motorcycles and automobiles. Not surprisingly, foreign-made automobiles currently make up about 30 or 40% of the total auto sales in the United States.
Thus, due to economic globalization, the Unites States is no longer the major producer and exporter of goods and commodities. In years past, particularly during the decades of the 1960's and 1970's, the United States usually exported more goods and materials than it imported, but because of economic globalization, the U.S. must now depend a great deal on foreign imports, something which has hugely affected the American economy via the elimination of jobs (i.e. outsourcing) and the rise in the prices of goods and services.
In contrast to the decades mentioned above, in 1984 U.S. imports of products and goods from foreign countries were in excess of those exported and the bulk of U.S. export and import trading was with other developed nations rather than with underdeveloped nations. To make matters worse, the 1980's saw the massive importing of goods from Japan in the form of electronics, automobiles and many household goods. Of course, the greatest import product in the 1980's was foreign oil, provided by those countries which make up OPEC (Oil-Producing Export Countries) like Saudi Arabia, Iraq and Mexico. But today, the reliance on foreign oil has skyrocketed, due to a larger population and more automobiles in the U.S. However, some analysts point out that the price of foreign oil, especially related to the cost of a barrel of crude oil (which presently is at its highest price in history) has more to do with the demand for oil in nations like China which is now only beginning to expand its economic impact into the world. Thus, as a result of economic globalization, the demand for oil and other necessary products has increased substantially which only drives the prices up while lowering the supply.
Changes in exports, i.e. In the difference between the value of a country's exports and that of its imports, have created numerous effects upon the level of national income, not only in the U.S. But also in various countries of Europe. Thus, one must ask exactly why nations rely so heavily on trade. As a definition, international trade "is a means by which nations can specialize, increase the productivity of their resources and thereby realize a larger total output than otherwise would occur" (Haynes, 234).
In regard to trade, two points must be discussed as to why trading is so powerful an entity when it comes to economic globalization. First, the distribution of economic resources, being those produced by man and by nature, among the countries of the world is very lopsided, meaning that some nations distribute more of their resources than others, mostly because of their long-held position in the global economy, and second, the efficient production of goods and products often requires different technologies and methods for distributing goods. A prime example is Japan which has a large and well-educated workforce; it also has an abundance of skilled labor which keeps wages down and profits high.
Therefore, Japan has the capability to efficiently produce goods at a low cost which is supported by the fact that Japan is a country where labor-intensive commodities are readily available for export to the U.S. And Europe. Take televisions, for example. In the 1950's and 1960's, televisions were mostly produced in the U.S. By such firms as Magnavox, RCA Victor and Sylvania using all American-made parts. But in the 1970's, this radically altered when Japan became the electronics giant of the world and flooded the U.S. market with its electronic products, especially televisions. Globally speaking, this created an imbalance in the television markets and forced the U.S. To import most of its televisions by the late 1980's.
In contrast, the continent of Australia has huge expanses of land as compared to its rather limited human and capital resources which makes it possible for Australia to produce land-intensive goods and commodities like wheat, sheep's wool and various kinds of meat products. Also, the country of Brazil possesses the soil, climate, rainfall and supplies of unskilled labor which makes it possible to produce low-cost goods like coffee.
Therefore, when one takes into consideration the power of economic globalization, such nations as Australia and Brazil will not be able to compete with other nations that are capital-driven and which produce products like automobiles, machinery and chemicals, all of which require a large workforce in order to produce them.
Some of those that advocate the existence of economic globalization do so because they are convinced that free trade as created by NAFTA in the early 1990's will allow the world economy to achieve a more efficient allocation of resources and a higher level of material well-being for the all the people of the world regardless…