Growth and Development of Global Economy - Economics Essay

Growth and Development of Global Economy - Economics - Essay ExampleOn the contrary, they are stuck in the vicious cycle due to the US subsidies which crowds the efficient producers market, since without subsidies the US cotton production would not be economical. The US government harms the poorer nations done subsidizing their own domestic cotton production more than it servings them through foreign aid, as proved by statistical data in The Oxfam Briefing typography (Oxfam International, 2004, pages 1-40). The subsidies does not only affect the Balance of Payments, but has a trigger down put together, it lowers the income of farmers, thus reducing the income available for expenditure, further strengthening the economic crisis by lowering aggregate demand, the multiplier sets into a negative action, and poverty sets in, thus making West African nations vulnerable to US cotton subsidies, furthermore in accordance with Anderson and Valenzuela (Anderson and Valenzuela, 2006, page 19 ) the usage of Genetically Modified Organism for the cotton production in developing nations would have a greater positive effect than eliminating subsidies completely. However, since it is a time-consuming process to convert every small farm to GM technology, hence from the West African nations perspective, the USA should communicate its cotton subsidies in order to aid the developing nations in coming out of the economic crisis and poverty situation.The US political policies focus on hard-core protectionism with regards to the cotton market the subsidies are unfair and distort the free trade system. According to the multiplier effect, protectionism in the cotton industry also leads to indirect help of US domestic textile and apparels industry, as presented in The Oxfam Briefing Paper. However, these subsidies focus on helping only the larger farms, despite publicizing otherwise, since 67% of the US farms are ineligible to attain the subsidy benefits, and it is generally the top 10%