Over the past three decades, rapid global integration and supply chain fragmentation have yielded massive efficiency gains and lifted profits for multinational firms. However, these same forces have accelerated deindustrialisation in traditional manufacturing heartlands. While middle-class consumers enjoy cheaper imported goods, structural economic shifts have widened regional wealth divides.
An international economic institute recently warned that globalisation has left behind "discarded communities" marked by stagnant productivity, systemic underemployment, and eroding public services. The report suggests that the solution requires more than simple income transfers. Instead, it calls for active state intervention: a combination of targeted regional infrastructure investment, comprehensive labor retraining programs, and reformed corporate taxation to ensure mobile multinational profits are captured.
Historically, governments managed economic transitions using robust welfare systems, regional development grants, and public investments in technical education. Today, the speed of technological and trade-induced disruption is outstripping these legacy frameworks. Critics note that while protectionism is a politically popular response, it risks sparking trade wars, making alternative domestic macroeconomic strategies essential to foster inclusive growth.
With reference to Extract B, discuss two macroeconomic policies, apart from protectionist trade barriers, that a government could use to reduce the negative impacts of globalisation.
