Globalization and Economy

Globalization is also referred to globalism. This term is used to explain the way the relationships of people, their culture and the business relations have increased globally. However, it is mostly used to refer to the economic relations. This includes the distribution of products and services around the globe and this is usually coupled with the reduction or removal of barriers that hinder international trade. The barriers include the tariffs, import quotas and fees imposed on exported goods. Apart from the economic view, globalization also refers to the exchange of ideas, cultures and languages across nations of the world (Wolf 12).

Free trade, on the other hand, is a type of policy held by certain countries. With such a policy, the country tends not to discriminate against goods brought in to the country and it does not interfere with goods being exported through the application of tariffs or subsidies respectively. The law of comparative advantage also applies for this policy. This is because it ensures that the member countries (trading partners) benefit equally from the trade of their services and products.

Several countries have continued to decrease the tariffs and currency barriers on international trade. Other countries have also made agreements in order to reduce some of the barriers that may hinder international trade. One of the agreements includes the Central America Free Trade Agreement. Another is the North American Free Trade Agreement. Free trade also ensures that there are no policies that distort trade by giving other companies or households advantage over others (fair trade). These include certain trade laws, regulations or taxes.