Global Issue: Globalization
The world has become increasingly globalized. Globalization is defined as an increase in the economic integration between countries. It often comes with a freer flow of goods, services, people, and ideas. After the implementation of free trade agreements like NAFTA, barriers to foreign competition in the United States decreased. This led to a surge in new products and services in the American market, as well as price drops because of lower foreign production costs. This increased trade also brings many economic benefits to the world, raising average household incomes globally. Increased trade also gives developing countries access to new knowledge and new technology, allowing them to increase their wages and productivity. Additionally, certain American industries benefit from new markets for their exports. However, on the flip side, many lower skill American workers suffer because their jobs move overseas where foreign competitors can produce the same goods at lowers costs. While demand for low skill laborers decreases, the demand for highly skilled workers increases. This increase leads to an increase in income inequality between the low and high skilled labor sector. An increase in foreign competition for low skilled labor also leads to wage depression for people employed in that sector of the economy.
Cold, hard facts: What globalization? What are its effects? Who does it help? Who does it hurt? https://www.stlouisfed.org/publications/inside-the-vault/spring-2008/crossing-borders-the-globalization-debate
- Globalization is an increase in the economic integration between countries.
- Free trade means more goods and services are available to more people at lowers costs: it increases access for consumers.
- International free trade increases technological innovation through global competitive markets, which means consumers benefit from newer and better technology.
- Free trade also increases access to new technology and new ideas, helping aid in developing countries in advancement and increase their real wages. This has allowed income inequality to decrease globally.
- However, domestic manufacturers of items that can be produced cheaper elsewhere lose out.
- Domestic low skill laborers also suffer, as the demand for low skill labor moves overseas with globalization, while the demand for high skill laborers increases.
- This leads to rising income inequality domestically between low and high skill laborers.
- Increased foreign competition in markets also puts downward pressure on wages, as many other countries can produce the same products with far lower labor costs.
Some people say… Globalization is good! It brings many benefits to the world and is something we should continue doing. https://www.thebalance.com/globalization-and-its-impact-on-economic-growth-1978843
Tl;dr: Globalization increases wealth across the world. Technological innovation is another one of the many benefits of globalization. Access to technologies from cutting-edge countries helps less-developed nations improve their tech sectors. This spread of technology also results in better products at better prices because of increased competition in markets. Globalization also allows countries to develop economies of scale that suit their resources and labor capabilities. Beyond economic benefits, globalization has also been credited with limiting military conflicts between countries because of the economic interdependence that develops when countries have trade agreements. Globalization provides net benefits to most nations in the world and is something that should be here to stay.
Others say… Globalization is a problem. It harms blue collar workers here in the U.S. and exploits the cheap labor and unrestrictive labor practices in developing countries. http://foreignpolicy.com/2011/11/04/the-downside-of-globalization/
Tl;dr: Many countries see a decrease in wealth. Certain sectors in some countries are also seeing a decrease in income, as in the United States. Tensions between certain nations have been heightened because of increased globalization. More global trade also increases the fragility of the supply chain, as was demonstrated with natural disasters like tsunamis and earthquakes. Increased interdependence as a result of globalization also leads to unfair power dynamics as powerful creditors can make demands of debtors and hold influence over them, as was true with Germany requiring Greece to implement austerity measures in their time of economic crisis.
So, what do you think? Is globalization an important and beneficial component of the world economy? Or is globalization causing more harm than good?