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THE economic meltdown has popularized a new term: deglobalisation. Some critics of capitalism seem happy about it—like Walden Bello, a Philippine economist, who can perhaps claim to have coined the word with his book, “Deglobalisation, Ideas for a New World Economy”. Britain’s Prime Minister, Gordon Brown, is among those who fear the results will be bad.
But is globalization really ending? The world’s economies are certainly slowing fast. And the speed and scale of this recession are raising doubts about the assumptions that had underpinned the drive to integrate world markets. At the end of 2008 the IMF said the world economy would grow 2.2% in 2009, less than half the rate in 2007. Now it thinks growth will be just 0.5% this year, the lowest for 60 years. Even that may be optimistic; in the last quarter of 2008, some economies shrank at annualized rates of over 10%.
Nobody ever said globalization had ended economic ups and downs, but this feels different: prima facie evidence of big problems at least, and possibly of the failure of globalization to deliver many of its advertised benefits, especially to the poor. True, economic slowdown is not the same as deglobalisation. And the slowdown has yet to affect one thing. For years, poor countries have been growing faster than rich ones; so far, they still are. The gap between real GDP growth in emerging markets and in rich countries widened from nothing in 1991 to about five points in 2007—and, says the IMF, it will stay at 5.3 points in 2008 and 2009. Helping
poorer countries catch up has long been among the benefits touted for globalization.
And yet the process is going into reverse. Globalization means the global integration of the movement of goods, capital and jobs. Each of these processes is now in trouble. World trade has plunged. As recently as the first half of 2008, boosted by rising commodity prices and a falling dollar, trade was growing at an annualized 20% in dollar terms. In the second half of 2008, as commodities sagged and the dollar rose, growth slowed fast; by September, says the IMF, it was in reverse. In December, says the International Air Transport Association, air-cargo traffic (responsible for over a third of the value of the world’s traded goods) was down 23% on
December 2007—almost double the fall in the year up to the end of September 2001, a result affected by the 9/11 terror attacks.
The downturn has been sharpest in countries that opened up most to world trade, especially East Asia’s tigers. Singapore’s exports are 186% of GDP; its economy shrank at an annualized rate of 17% in the last three months of 2008. Taiwan’s exports are over 60% of GDP; and its economy may fall as much as 11% this year. The downturn has also hurt rich countries that specialize in staid old-fashioned manufacturing—supposedly a safer activity than the reckless delusions of finance. On average, says the IMF, rich countries will contract 2% this year. But Germany and Japan, big exporters of capital goods, cars and electronics, will do worse, their
economies shrinking by 2.5% and 2.6% respectively. In the last quarter their economies contracted alarmingly, falling at an annualized rate of 8% in Germany and by 13%—the worst since 1974—in Japan.
1
Which of the following cannot be inferred from the passage?
1. Poor countries are still growing faster than rich countries.
2. Deglobalization is all set to become a reality because of the economic slowdown.
3. Germany and Japan are rich countries which are also big exporters.
a. Only 2
b. 2 and 3
c. 1 and 3
d. Only 1
2
Which of the following can be inferred from the passage?
a. World trade plunged in the second half of 2008 as a result of fluctuating commodity prices.
b. Air Cargo traffic fell by more than 12% in the year upto the end of September 2001, due to the 9/11 attacks .
c. The economies of Singapore and Taiwan have shrunk in 2008 primarily due to their opening up to world trade.
d. None of the above.
3
The closest meanings of the words ‘prima facie’ and ‘staid’ are?
a. Foreboding and Steady.
b. Sound and Archaic.
c. ‘At first sight’ and Sedate.
d. ‘At first sight’ and Tempestuous.
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