The Misconceptions Of Globalization

Published Date: 02 Nov 2017

Michael White

Mgmt 4413 International Environment of Business (Spring 2013)

Dr. Quazi

            It’s Christmas day and everyone is busy trying out his or her new clothing, toys or electronics. My uncle started to go around to investigating everyone’s new belongings. He came over and started to point out how every one of our toys was made in a different country. Furthermore, that this is the biggest reason why Americans don’t have jobs because companies are shipping jobs overseas. Being so young I didn’t play to much attention to my uncle’s mumblings. But now being introduces to international affairs at Prairie View A&M I ran into a misunderstanding among common people about why this occurred. My uncle was adamant that since our Christmas girts was made in a different county that meant that it negatively affected Americans. But for whatever reason our presents was made overseas did that mean that it totally negatively impact the United States? In my first economic class at Prairie View A&M a term came up that address my uncles concerns. Globalization was the reason why most of the Christmas presents was made from a country overseas. I always overheard this term either being from the news, read about it in the newspaper or a group of old man drinking their morning coffee. However, there was a slight inconsistency in the meaning of globalization from each source that explains their opinion. One opinion that I pointed early was my uncle’s negative sentiment towards the effects of globalization by sucking jobs from Americans. Although another outlook is that it helps keep prices low to make products accessible to lower income families down and assist developing counties to dig itself out of poverty. But with the assistance from my International Environment of Business course I can help differentiate whether or not globalization negatively or positively affects people, towns, cities or counties. If we must start off with what is globalization in the first place?

  Globalization is a process that integrates the world markets for goods, services, capital, labor, technology, knowledge, and ideas, which expands the world markets, increases global competition. Globalization enhances global productivity through a improved and more efficient apportionment of the potential factors of production. Globalization is also how different cultures; societies and economies integrate across an international framework that includes transportation, communication, and trade. Globalization refers to the fast integration and interdependence of various nations, which shapes the world affairs on a global level. Globalization has affected the products people consume, the environment, culture, security, and idea exchange between different countries. I will concentrate globalization and we will focus only on the economic perspective.

Some organizations, groups, news outlets or newspapers will argue that globalization is a positive development, affecting new industries and creating more jobs for developing countries. Other organizations, groups, news outlets or newspapers say globalization is negative because it will force less developed countries of the world to do anything the developed countries tell them to do. On the other hand developed countries, for instant the United States are the ones who may lose out because they are outsourcing many of the manufacturing jobs that used to be done by their own citizens. Which outlook that would help appeases my uncle’s and the right-wing party of America. Outsourcing refers to obtaining goods by contract from outside sources. This is why you may find many of your clothes with labels from developing countries such as Malaysia, China, and the Philippines, where they can be produced at lower cost. Opponents of outsourcing believe that no one wins with the practice of outsourcing. According to Ricardian an economist, " Offshoring inputs reduces production costs and raises profit margins. The additional profits provide retained earnings that can support an expansion of business investment"( Paus, 82).

Global trade gives developed counties access to products, such as fruits, that cannot be produced domestically. Global trade means that produce such as bananas, mangoes, oranges and kiwi fruit are easy to find in our grocery stores year away. These turns in events give farmers in developing countries the opportunity to produce and sell more goods and achieve I higher level for monetary level. But not always do the people in developed countries want this to occur because they feel that the wealthier countries purchasing the products also are the ones who make all the production and trade rules that they must stomach, which hurt their chance at fair competition in the world market place. In addition, this forces some developing countries to produce export foods wanted by the wealthier developed countries instead of producing local foods to feed their own populations. "Fears about economic globalization overlook the fact that the growing international division of labor can be beneficial to all participants as seen in the spectacular strides that have been made recently by once impoverished developing countries. Free trade does threaten some, but the negative effects of international trade even on developed countries such as the United States have been vastly overstated" (Douglas, Abstract). For example, over the next fifteen years 3.3 million jobs will be outsourced that comes out to be 220,000 jobs per year. A horrible statistic left alone to fend itself until you find out that also over the next fifteens years that 22 million new jobs will be added. For every dollar that the United States spends on outsourcing, the United States recoup $1.13 in benefits. To the counties that receiving these offshoring jobs become an export for American counties and the income generated by those jobs will help develop the local developing counties economy. One can’t deny the importance of the positive aspects that globalization give to rather poor countries to develop. Which is due to access to new technologies, direct investments and loans, products and information, high mobility of all production factors. Developing counties greatest advantage of low cost of the human and physical capital for most of them globalization ensured access on new markets, increases in exports and a great amount of satisfactory conditions for attracting foreign capital. American companies have transferred most of their manufacturing jobs to foreign countries where it is cheaper to do business. That could be contribute to the high standard of living that the United States enjoys. Outsourcing is victim to a counties that want a high standard of living coupled with low prices for good and services but are not willing to get paid the wage that will help do so. Being that minimum wage in the United States is 7.25 but in developing counties the wage could be as low as .25 per hour you can understand why companies are willing to outsource jobs they don’t need a high level of skill to complete. Education in the United States is the key to a new emerging economy. For example, intelligent design frees up Americans to be innovators, designers, and realizers of new technologies and concepts. Studies from some economists show a positive position concerning the net effects of globalization on economic growth. These effects have been analyzed over years studies trying to measure the impact of globalization on countless nations' economies using variables such as trade, capital flows and their openness, GDP per capita, foreign direct investment (FDI) and etc. These studies examined the effects of several components of globalization on growth. However, the overall findings of those studies seem to be helpful to economists’ positive outlook, instead of the one held by the public and non-economist view. I pointed this out earlier in the introduction of how the term globalization could differ from where you overheard the information. Trade among nations through the comparative advantage promotes growth, which is indorsed a strong connection between the openness to trade and the affect on economic growth and economic performance. There is a strong relationship between capital flows and their impact on economic growth. But to sustain that positive relationship foreign direct investment is needed to impact a positive growth in wealthy countries and an increase in trade and FDI, resulting in higher growth rates. Further evidence indicates that there is a positive growth-effect in countries that are sufficiently rich, as are most of the developed nations.

Globalization has developed into a double edge sword topic. On one side you have globalization that forces businesses to modify its strategies based on new ideological trends that try to balance rights and interests of both the individual and the community. This helps empowers businesses to compete worldwide and also implies a affected change for business leaders, labor and management. By receiving the participation of workers and governments in developing a want and need to implementing globalization policies and strategies it will potentially benefits of its economical growth. Yes, the sentiment that my uncle shared with us on Christmas day was correct for all practical reasons. But he didn’t seem to have the broader picture of why it is a good thing that certain goods and service are made overseas. It seems that there will always be a heated debate about the true effects of globalization and if it really is such a good thing. Good or bad, though, there isn't much argument as to whether or not it is happening.

 

 

Irwin, D. A. (2000). The two faces of globalization. Critical Review, 14(1), 11-18. Retrieved from http://ezproxy.pvamu.edu/login?url=http://search.proquest.com/docview/217269522?accountid=7062

 

Edited by Eva Paus . P 82 (October 2007). Global Capitalism Unbound . Retrieved from http://www.palgraveconnect.com/pc/doifinder/10.1057/9780230608849