1.

Describe some of the main similarities and differences between the first wave of
globalisation (before the first world war) and the second wave of globalisation
(since the end of the second world war). Explain why trade protectionism increased
in most Western countries from the late nineteenth century, and discuss any lessons
that may be relevant for today.

Similarities
Openness to free trade (Anglo-French agreement / multilateral trade agreements such
as NAFTA & TPP)
Retreatment into protectionism (Smoot-Hawley Tariff Act -> retaliatory actions /
Trump administration -> trade war with China)
Differences
Colonies (no bloc economy)
Immigrants
Why trade protectionism increases
Response to the Great Depression
Protectionism was a mean to protect their own industry for US
Revengeful actions against US were taken by other countries
Any lessons for now?
This section should be a personal opinion (?)

2. Consider the following statements. ‘Chinese workers earn only $.50 an hour; if
we allow China to export as much as, U.S. workers will be forced down to the same
level of wages. Because you can’t import a $10 shirt without importing the $.50
wage that goes with it.’ Discuss this claim using your knowledge on economics. Is
it true in reality? Why and why not?

Not necessarily true.

The workers’ wage in each country is determined by their labour productivity.
The low hourly wage of Chinese workers ($0.5) reflects their low productivity while
the high wage in US reflects a highly productive labour force.
The differences in wages don’t affect the gains from trade for each country. In the
long run, US workers can work in sectors that we have a comparative advantage at
and gain from greater consumption and cheaper prices of imported goods. (Note that
as shown in Week 3 lecture, in the short run, however, labour can’t switch across
sectors costlessly, and hence, international trade may affect the real wages and
employment of local workers in the import-competing sector)

Consider all pros and cons of TPP for Japan that we discussed in class. By focusing
on the agriculture sector in Japan, discuss the likely impact of TPP on this
industry and the consumers.
negatively affect farmers’ profit by lowering the relative price of agricultural
products. Introducing cheap foreign products would increase competition and drive
small farmers out of business
wheat producers will suffer a 40% hit while rice and other agriculture products
would also suffer a 4-5% hit by 2025.
BUT many experts view consumers smarter than what anti-TPP protestors make them out
to be. e.g. American cherries (American cherries were viewed as worse quality and
didn’t affect the existing cherry market. In fact, this led cherries produced in
Yamagata, which is famous for its cherries, to increase its profits)
doesn’t mean all consumers would opt for these foreign products, especially
regarding safety issues because Japanese products are renown for their high
quality.
food security is a severe issue: current strict regulations for imported goods will
have to be relaxed to allow flexibility for foreign products, which may include
GMOs
abolition of the 1952 Main Crop Seed Law
lack of governmental subsidies forces farmers to rely on global corporations and
less diversity of rice.

“The success of China and India show that openness to global trade and investment
is clearly good for achieving rapid economic growth and eradicating poverty.”
Evaluate the above statement critically, drawing on both theory and empirical
evidence.
Theory

Empirical Evidences

Given the ageing society problem in Japan, discuss how it changes the gains and
losses from globalisation. Use economics analysis to elaborate your discussion.

Gains
Foreign workers can fill up job openings
“Projections by the Japan Institute for Labour Policy and Training give the
prediction that, if the worker participation ratio were to proceed at the same
level as 2006, the 66.57 million people who were in the labor force at that time
would dwindle to 55.84 million by the year 2030, an estimated decrease of 10.7
million people.”
Japan could import people to work at nursery homes
More people living in Japan would mean that the burden of taxes to pay for elderly
people’s pensions would be disbursed

Losses
Foreign workers may reduce jobs given to Japanese young people, women, the retired
people who are still able to work, the disabled, etc and others who are able to
work
Technical Intern Training Program (TITP) is costly because over half of the foreign
workers must leave the country after 5 years
→ the program must spend time and money training new workers for years to come
It causes tax evasions since many foreign workers disappear
Over 7,000 immigrants disappeared from the workforce in 2017, and an additional
4,300 left their jobs to work as undocumented workers (Denyer and Kashiwagi, 2018).
As of January, 2010, 91,778 people were illegally overstaying their visas (Ministry
of Justice estimate), and many of them are thought to be working illegally
Their visa program doesn’t allow immigrants to change job sectors → some of them
vanish/ work without proper documents → ultimately results in tax evasions that
affects the national income
Current immigration system cannot support immigrants adequately
Japan lacks proper care for foreign workers
Inequality
May lead to wider income inequality
Japan has failed in importing foreign workers to fill in jobs in the past
the Japanese government invited workers from Brazil and Peru of Japanese descent in
the 1990s because their economy was growing and companies needed more workers
but because of the 2007-8 crisis, many of them were laid off by companies first to
protect their Japanese workers
The government also paid them about $5000 USD to fly back to their home countries,
and to never apply for a work visa in Japan in their respective fields (Tabuchi,
2009).
→ this cost the Japanese government a lot of money, and stripped the immigration
rights of Brazilians and Peruvians
Deterioration of national security
Foreign workers often cannot earn enough for a stable life → earn money in other
unlawful ways
A permanent increase in longevity (an increase in life expectancy) leads to
increased growth rates in the short term as the decrease in the marginal propensity
for workers to consume leads to a lower real interest rate and an increase in
innovative activity