Globalization has changed the way we live our lives for better and for worse, our countries and cultures have become more integrated and a single global market has emerged. As trade and investment barriers fall and technological advances in transportation, and communication and information processing technology are on the rise, it is easier than ever for today’s firms to source and sell their products and services on a global scale. While developing nations such as China and India are seeing their levels of output increase, developed nations like the United States and Germany are seeing exactly the opposite happen. When one analyzes the short term benefits of globalization it has no doubt, allowed for more global competition from almost every country, therefore driving companies to produce better products at a cheaper price; thus making market offerings more affordable. When I think of globalization, though, I have two questions how exploitive are companies in their practices when sourcing their labor to a developing nation, and two, will there be any negative long term implications for developed countries such as the US, and what can be done about it?
There is no doubt globalization has benefited developing countries on some level. Today in these countries there is a higher standard of living because jobs are being sourced to unskilled workers. Also businesses in these countries have access to foreign direct investment encouraging them to participate in the global marketplace. While these benefits positively affect these nations, it is impossible to ignore the possibility of exploitation of the unskilled worker. If one looks back in American history to the Industrial Revolution; there was a stark contrast between the upper class and the lower class. Mr. Ford, although an immigrant himself; did not sit next to the workers on the assembly line and help. His genius, humane or not, was the exploitation of immigrants to mass produce his product, the T-model car. Globalization today is not too much different, except that we have replaced immigrant workers; with foreign workers who are not on our “turf.” These individuals are often unskilled and live in developing nations that have minimal labor laws and regulations for their labor forces. It is important to recognize that this can encourage serious exploitation by developed nations and inequality among economic classes. If these implications are realized and managed properly by multinationals and large corporations outsourcing their production efforts than globalization can be a driving force for economic prosperity and, ultimately equality in these nations.
Globalization positively affects the developed countries such as the United States in the short term, however in the long term it poses some steep challenges; threatening our position as a global power. The short term positive affects are companies from the US are enjoying low labor costs which allow for a cheaper market price, they also are infiltrating new markets and have access to new and more consumers all over the world. In turn, consumers are enjoying cheaper prices and higher quality of products and services because of the increase in global competition. But do all of these benefits come with a price?
Arguably, yes. As the textbook stated the United States share of world output from 1963 up to the economic recession in 2009 has decreased by 16.2%. If the United States isn’t responsible for world output, certainly someone else is, and while the United States is still the world’s largest industrial power; this share is slowly and steadily slipping. As companies source their jobs to unskilled workers in the BRIC (Brazil, Russia India and China) nations, unskilled workers of the developed nations will suffer if not provided with the proper education. While the process has already begun, in the years to come economic inequality of the upper and lower class will become greater if the unskilled workers in the United States are not given the opportunity to better their education. Before Steve jobs died he pleaded with President Obama for much needed education reform. Regardless of the fact the President did not listen, his argument was that if the United States reforms education and the average American can compete in math and sciences, specifically in engineering and medicine, than our country will be in a better position to compete in the world’s economy. While some levels of inequality is necessary for any economy- it is the essence of capitalism, it is also imperative that we do not let the gap between the rich and poor slip too far from each other. Another way the United States can better position itself in the world’s ranks is by reforming immigration policy as well. Often times a student from foreign country such as China, studies in America and once their visa expires the student will go back to their home country. Instead of allowing these educated workers slip from our nation, we should instead, give them citizenship. After all, the beauty of the United States is while our heritages may be different, collectively we have always been able to pioneer and innovate business practices and advance more quickly than other nations. If we allow and encourage the students who study in our universities to stay in the United States after they graduate, many times they will. This could be a big opportunity because other countries are more apt to do business with those of their own culture, thus creating better bonds with places such as China who have different value systems than we do. But more importantly these individuals will build businesses in the United States. Thus, how the United States responds to globalization will be the ultimate indicator if we have been affected positively not only short term, but long term as well.
I am definitely pro globalization given it is responded with proper policies and reforms in all aspects, meaning its affects short term and long term with both developing and developed nations.