One advantage of economic globalization comes from the free trade. Two nations can
benefit from free trade by specializing in producing those products in which they enjoy a
comparative advantage (Case & Fair 2004, p.716). A country enjoys a comparative
advantage in the manufacturing of a good if the production has a lower opportunity cost
than it would have if produced in other country. When specialization takes place in a
production, the production will become more efficient. It is due to research and
development which aids in improving the production and minimizing the cost of
production. This will thus stimulate the domestic economy (Case & Fair 2004, p.716).
Another advantage of economic globalization is world output will increase due to free
immigration of labours. Immigration of labours happens because of the high wages offered
and the job opportunities in a local country. When local firms hire these labours, their cost
of production reduces, assuming that each labour has the same efficiency. This leads to an
increase in productivity in the country and thus, there will be more total output which leads
to expansion in world output (Case & Fair 2004, p.720). For example, a firm in Malaysia
uses 5 workers to produce 10 shoes and their total wages are RM1000. If that firm hires 10
immigrants to produce the same amount of shoes with the same amount of wages, the
production of shoes actually increases without any extra cost, assuming all workers has the
same efficiency. When this happens to all firms, the world output for shoes will increase.
