Economics of Regional Trade: Globalization and Wage Analysis

This essay provides a detailed analysis of the economics of regional trade, focusing on the impacts of globalization and wage stagnation. It critically examines International Political Economy (IPE) theories such as Realism, Liberalism, and Marxism to explain the factors contributing to low wages, particularly within multinational corporations like Walmart. The essay proposes several strategies for improving wages in capitalist economies amidst growing globalization, including raising the minimum wage, strengthening collective bargaining rights, and addressing workplace abuses. Furthermore, it evaluates the contention that globalization is a 'golden path' to prosperity, discussing the need to dismantle trade barriers and update international trade rules to ensure equitable benefits for the global community. Desklib offers this essay along with a wealth of other academic resources to support students in their studies.

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Name
Professor
Institution
Course
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Global political economics
1.1 Critically analyze IPE theories mentioned in the case and explain the theoretical attributes
that are responsible for low wages in Walmart
International political economy has been approached using three theories; Realism,
Liberalism and Marxism
Realism theory
The theory states that nations existed are as a result of the boundaries that were created
aftermaths of wars and peace deals which lead to the development of nationalism. World politics
developed due to struggle among selfish states for power and position with each nation
considering its own interest. Each country portrays its responsibility as protecting its people
against invasions by foreigners. While the modernization of man was at its lowest at that
moment, this served as base to response to outsiders and individuals of different nationalities,
ways of life, ethnicities or race. For dominance, nations sort economic power over other states.
Therefore this lead to colonialism, the conquering of original peoples of less developed countries
by European nations so as to obtain raw materials and labor for their industries thus leading to
economic, political and military power (Kegley & Blanton, 2014, p. 123).
Mercantilism, another form of colonialism, is also state-driven as countries protect the
industries within their territories from external competition by use of subsidies. Free trade is
created to maintain the economic and political dominance of one nation over the less superior
states.
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Neo-colonialism, also known as neo-imperialism, is usually a form of attainment of
power by organizations such as intergovernmental agencies and multi-national corporations.
These organizations use their market position to influence governments to form policies that suit
their ambitions without considering the implications on the natives of that nation, this is a form
of suppression (Kegley & Blanton, 2014, p. 115).
Introduction of boundaries therefore served as a means of preventing migration of
workers in search of high wages. This therefore led to corporations tapping from the available
cheap labor increasing their profitability while workers continue to earn low wages (Kegley &
Blanton, 2014, p. 105).
Liberalism theory
Liberalism is different from realism theory in that it methods partisan and monetary
relationships as configurations that are interdependent within the universal context. Liberalism
refers to the idea that man is educated and views in improvement and development of a realm
where all states effort in collaboration with main aim of betterment of mankind. Economic
integration and globalization are enhanced purely by liberalism as it is the liberalist that believe
that economics and trade is the route to affluent, safer and free world (Kegley & Blanton, 2014,
p. 142).
Democratic politics is the major basis of liberalist theory. The advancement of free trade
and capital markets squarely dependents on principles of democracy which includes property
rights, human rights and rule of law. The profuse philosophy follows the spread of independent
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and monetary ideologies to harvest globalization, monetary assimilation and interdependence
(Kegley & Blanton, 2014, p. 240).
Liberal theorist consider monetary amalgamation as the pathway to international peace
under a particular fiscal and social realm order. The goods that are used around the world are
usually as a result of complex interlinked chains of supply globally, which only take place when
people have an outstanding dream of prosperity and commerce. Thomas Friedman, in his
book, ‘The World is Flat. A Brief History of the Twenty-first Century,’ suggested that two
countries will not be able to be antagonist as long as they are a major global supply chain
(Kegley & Blanton, 2014, p. 232).
By 2011, largest global companies have created a lot of revenue and employed workers
in millions. Wal-Mart employs millions of people although this has come at the expense of
irresponsibly use of non-renewable natural resources and employment of unskilled and
unqualified labor and paying them low wages (Kegley & Blanton, 2014, p. 243).
Marxist theory
Marxist mainly criticizes capitalism on the basis that capitalism will fail because there
will be a revolution for economic reasons as workers will revolt against the owners of the
corporations due to low wages and exploitation. The result of the revolt will be the onset of
socialist as “entrepreneurship propagates the seeds of its own devastation .Marxist formulated
three laws that are widely refers as economic laws (Kegley & Blanton, 2014, p. 134).
The law of disproportionality has it that quest for wealth gains and accretion
“entrepreneurial frugalities tend to lead to overproduction of certain types of goods. “This will
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automatically cause perception for wage imbalance and those earners need to buy the goods that
are overproduced. The theory emphasizes on the fact that the disproportionality is brought about
by the anarchy of the market and leads to periodic depressions and fluctuations in the economy.
Cheap capital leads to the inflation of value and leads to promotion of housing investment
(Kegley & Blanton, 2014, p. 125). There is the bubbling of assists in countries such as US and
United Kingdom. The market bubbling leads to the creation of overproduction in the housing
sector and this leads to destruction of the economy.
Law number two is the law of the accumulation of capital and the concentration of riches
among the capital class. The law explains the issues to do with the ever increasing urgency to
upgrade the efficacies and also the eradication of the risk of investment. Marx hypothesized that
capitalism would push for the accumulation of wealth in the hands of few and hence poverty
would prosper. The continued declination in labor will make the capitalists initiate a conflict of
demand for the social revolution (Kegley & Blanton, 2014, p. 136).
Marxist that law says that when capital accumulates and becomes abundant, there is a
decline in the rate of return and therefore the decrease incentives to invest. The last downturn in
the United States made the country employ the Keynesian concept through the accumulation of
debt and bringing cheap products to the market and also increment of cheap capital (Kegley &
Blanton, 2014, p. 278).
1.2 Propose ways of improving wages in capitalist economies in the face of growing
globalization.
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The stagnation of wage is not inevitable making reference of the direct effect of the
policy options on behalf of the characters with might and riches who have led to the suppression
of wealth and who haven responsible for the suppression of the growth of wage for the large lot
in the recent past (Kegley & Blanton, 2014, p. 99). Wage stagnation has therefore been caused
by policy and can just be alleviated by use of policy.
The legislators should strive to deliver a shared growth of wage via the monetary and
budgetary policies which gives priority to full employment and the strengthening of the labor
market with an aim of making employers pay increased salaries so as to maintain the kind of
workers that they need and also help in the taxation of other policies that will help in ensuring
that there is the existence of economic gains which do not accrue to the top 1%.
This can help to grow wages by raising the minimum wage. An increase in the minimum
wage will force all the employers to adjust the wages of low income earners to conform to the
stipulated minimum wages. Updating overtime rules concerning the remuneration of workers.
Therefore firms will be required to promote their workers and increase their salary
periodically .This ultimately leads to increase in the wages of worker with time (Kegley &
Blanton, 2014, p. 252).
Strengthening rights to collective bargaining. Trade unions will be better placed to
negotiate for better wages for their members. The right of workers to go to strike to demand for
better wages will force the corporate owners to consider other alternatives to avert industrial
action (Kegley & Blanton, 2014, p. 235).
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Regularizing undocumented workers in order to allow workers to be able to move freely
in search of better wages. The movement of workers will in turn allow the market forces of
demand and supply to adjust the equilibrium wage that will be attractive to the workers.
Ending forced arbitration in order to allow workers to freely determine the conditions
under which they favor to work best and increase efficiency. Workers will be able to negotiate
better terms of working and wages (Kegley & Blanton, 2014, p. 182).
Securing workers’ access to sick leave and paid family leave which will ensure wages
increase due to the payment made. Workers will also benefit from family leave as it will not
reduce their payment (Kegley & Blanton, 2014, p. 231).
Closing race and gender inequities. The gap has always been a source of disparities in the
wages earned by workers. In most cases, workers do the same type of work but they are paid low
wages due to their race or gender status. Therefore eliminating the differences increases the
wages of the workers.
Awarding government contracts only to firms that adhere to wage. Firms will therefore
need to strive to make sure that their workers are well paid in order to stand a good chance of
getting government contracts. These is because government contracts come with a lot of
revenues to the firms and no firm will be willing to miss out on such incomes (Kegley &
Blanton, 2014, p. 267).
Health and safety laws that will safeguard the wellbeing of workers. An individual
working in a safe environment will be protected against diseases that come with pollution of
environment which in turn leads to increased productivity of workers and consequently increase
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in revenues of the firm. High revenues will lead to increase in wages of workers (Kegley &
Blanton, 2014, p. 254).
Tackling workplace abuses such as misclassification and wage theft. Most employers
form a tendency of reducing workers’ wages using underhand methods. Once these abuses are
handled the wages of such workers will increase as they will be assured to earn their correct
amount. Evaluate the contention that globalization is ‘the golden path that connects and lifts the
diverse global community to the next level of prosperity (Kegley & Blanton, 2014, p. 132).’
The Brexit vote held in the United Kingdom and the executive elections in the United
States are good indicators that public discontent with integration is on the rise. The alarm raised
by this two nations cannot be ignored. Isolationism and trade barriers can break the trade-based
fiscal engine that has conveyed peace to the universe for a long time (Kegley & Blanton, 2014, p.
68). Trade has improved the living standards of people in developing countries and if developed
countries close themselves from global market, world poorest countries will suffer the most.
2. Evaluate the Contention that globalization is the golden path that connects diverse
global community.
Globalization has to be enhanced in a number of ways as it is the path that has led to
prosperity in the global community. First, states need to dismantle the trade barriers and also
make sure that they do not implement policies that lead to the distortion of the global markets.
Protectionists prevent free trade from taking place thus access to high quality products at cheap
price is also prevented (Kegley & Blanton, 2014, p. 143).
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Countries should update the universal rules that bind trade and the economic conditions
and implement the agreements that they come up with. This is in a bid to make sure that
globalization continues unhindered.
Institutions like WTO should perform their duties independently so as to eliminate the
trade barriers that lead to the increase in the costs of trade. There should be the abolition of
agricultural subsidies and also the removal of restrictions in the trade services and improve the
connectivity aimed at increasing trade finance (Kegley & Blanton, 2014, p. 167).
Finally, and most important, wealthy countries should support developing countries’
efforts to integrate themselves further into the global economy. Given trade’s record of reducing
poverty, this is a moral imperative; it is also indispensable for peace and stability. Wealthy
countries should aid the efforts of developing countries in the integration into the global
economy (Kegley & Blanton, 2014, p. 187). Leaders from different countries should foster to
encourage trade which would include more individuals. The latter can be done through the
adoption of international rules aimed at managing openness and interdependence. Strong social
safety nets should be established together with infrastructure.
No country can deliver long-term prosperity to its people on its own. Closer international
cooperation and economic integration is the only way forward. Therefore globalization cannot be
omitted if the world is to develop (Kegley & Blanton, 2014, p. 122).
3.1 critically evaluate the argument that regional integration in Africa is a” must”
Regional integration concerns the different types of both political and economic
agreements. The policies are different and vary from the trade treaties to agreements
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whereby the member states give part of their patriotism to a higher entity. There exists
both merits and demerits of regional integration (Kegley & Blanton, 2014, p. 67).
Importance of trade
Trade gains comprise one of the most important merits as far as regional
integration is concerned in a multiple number of states.in many cases, the various
agreements put across by nations allow easy movement of goods across borders. The
latter leads to the benefits of trade. The trade agreements give room for countries that
have a good amount of goods to trade overseas with ease.th latter will lead increased
gains to trade (Kegley & Blanton, 2014, p. 140). The trade agreements discussed above
lead the countries that are highly industrialized to produce more and sell their goods
to a bigger market, hence leading to increased economies of scale.
Limited fiscal competences
Some of the regional integration the creation of a single currency have been
noted to result to monetary crisis.in absence of regional integration given countries
can curb the supply of their own money for it to fit their own conditions of the
economy (Kegley & Blanton, 2014, p. 142).
Cultural Centralization
The integration of regions comes about with economic demerits mostly in the
strong integration like for the case of the European Union, it can cause a loss of the
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cultures of the unique minority in a given area. The institution possesses a variety of
languages and cultures that are termed official in the government of EU. The
languages do not include the minority languages that are spoken by the minority
cultures in the European countries (Kegley & Blanton, 2014, p. 199).
Regionalism is a political procedure described by monetary strategy co-task and co-
appointment among nations" (Kegley & Blanton, 2014, p. 156).
One of the real advantages that the procedure of regionalization offers is the
refinement of voting public to progression. "Both in Europe and North America,
governments have a tendency to embrace the perspectives of star integrationist
business pioneers (and work pioneers too in the majority of Europe), while the people
has a tendency to be more careful". In any case, there has not been sufficient favorable
condition for exchange and henceforth there is an extraordinary opportunity to get
better. There is much wastefulness in the outskirt organization that should be taken a
gander at and handled for thriving to be there (Kegley & Blanton, 2014, p. 173).
3.2 Discuss the reasons why regionalism might assist or impede trade liberation at global
level.
Regionalism is important since it allows for creation of a for trade zone. Integration can
help in building regional value chains and also tap global value chains. There is the importance
that comes with the integration as it speeds up the ease of clearance at the border and also the
increased update on the infrastructure. Increased efficiency in the customs lead to a better
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collection of tariffs (Kegley & Blanton, 2014, p. 167). With integration, the IT systems have also
been easy to implement in most of the African countries.
4.1 Extent to which complete monetarism is integration is possible and its
implications
Monetarism can be applied where the government wants to control money supply.
Without having a currency, a country cannot increase the level of competitiveness. This can also
make a country not to boost the economic growth through devaluation. Devaluation of currency
is important but it would be more important if at all the world could use one currency (Kegley &
Blanton, 2014, p. 143).
With an aim of cutting down a country’s specific risk, a country can ensure that there is
equal distribution of resources by the use of complete monetarism. There can however be the
problems to do with arising and hence make integration not easy and the latter include the
problems of varying fiscal regimes and macroeconomic risks of countries. With economic
integration, the problem of balancing budget and high inflation. Monetarism will also applicable
when issues of administering the global central bank arises. With complete monetarism, the
implications that would arise would include a decentralized system, little human intervention that
is self-adjusting (Kegley & Blanton, 2014, p. 35).
The issue of complete monetarism is tough due to the complexity of the euro project.
There is also inadequate respect from the individuals who write it off. Complete monetarism can
easily lead to risk in currency and untold coups.
4.2 DISCUSS WHETHER HEGEMONIC LEADER IS NECESSARY FOR A STABLE
INTERNATIONAL MONETARY AND FINANCIAL SYTEM TO EXIST
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