Globalization

Globalization involves enhanced interdependence and integration of the world’s economy. It is described as the spread of technology, investment, and products across national cultures and borders. Gaston and Khalid (2010) point out that, on the upside, globalization can improve the standard of living through modernization, the creation of job opportunities, and enhanced access to services and goods. On the downside, the same can result in lesser job opportunities for high-wage developed countries as they move production of goods to low-cost labor countries.

From as early as the 1960s, the rate of globalization has continued to increase and has been characterized by an increase in trade, greater movement of capital and labor, an increase in exports as a percentage of GDP, and a rise in the global economy interdependence (Gaston & Khalid, 2010). According to the World Bank (2013), globalization has added a major benefit to the emerging middle class in countries such as Brazil, Indonesia, India, and China, as well as the world’s top 1% economies. The middle class comprising approximately 400 million people, earned and consumed more in the last two decades before the 2008 global financial crisis. These changes were propelled by economic growth in the aforementioned countries, excluding the top 1%. The global middle-class inflation-adjusted income median increased by 80% in the years between 1988 and 2008. However, the incomes were only between $3 and $5 per capita/per day. Among the top 1% of economies, real income increased by over 60% in the last two decades. This was an income increase of close to $23,000 per capita/annum in comparison to the $400 for persons around the median. In the world’s poorest 5% countries, income was almost stagnant despite real income increases for the second-lowest and bottom deciles (World Bank, 2013).

Stilglitz (2014) notes that winners of globalization are organizations with comparative advantages worldwide, such as high-tech software companies and countries with infrastructure and low-cost labor for export, such as Thailand, Vietnam, and Korea. Exports from developing countries have played a vital role for the latter countries, resulting in a new middle class with rising incomes, workers in export industries, and consumers who enjoy lower products and service prices. The top 1% of economies have benefited from flexible labor markets due to the movement of labor. For example, foreign workers fill healthcare vacancies, and multinationals take advantage of low labor costs and tax breaks in low-income countries. For instance, Apple manufactures its products in China, while Google and Amazon have subsidiaries in countries with low tax rates, including Luxemburg and Ireland. Further, the highest earners are able to negotiate for increased wages; the top 1% of earners increased their real income by over 60%.

As discussed by Rodrik (2017), the losers of globalization include developing countries that have failed to develop their export manufacturing sector due to poor or non-existent infrastructure. An example is the agricultural sector, whose real earning has been comparatively small in terms of growth. This is because of the low-income demand elasticity of agricultural commodities; hence, a rise in real GDP does not equate to a similar rise in demand for agricultural products. A structural economic change that results in decreased employment opportunities for unskilled manual labor creates losers of globalization. Other losers include average taxpayers who do not benefit from global multinational tax avoidance schemes; environments with high global warming and decrease of natural resources; and high-cost labor manufacturing sectors in countries such as the US and the UK, which struggle to compete with low-cost labor countries.

References

Gaston, N., & Khalid, A. M. (Eds.). (2010). Globalization and economic integration: Winners and losers in the Asia-Pacific. Edward Elgar Publishing.

Rodrik, D. (2017). Too Late to Compensate Free Trades Losers. Project Syndicate, 11.

Stiglitz, J. (2014). On the wrong side of globalization. The New York Times, 15.

World Bank (2013). The Winners and Losers of Globalization: Finding a Path to Shared Prosperity. https://www.worldbank.org/en/news/feature/2013/10/25/The-Winners-and-Losers-of-Globalization-Finding-a-Path-to-Shared-Prosperity

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Globalization: Winners and Losers     

Write a 2- to 3-page essay (not including cover and reference pages) on the “winners and losers” of globalization. Look at countries, multinational corporations, workers, the environment, national security, or whatever sector you determine to be a winner or a loser.

Globalization

Support your essay with a minimum of two sources beyond the required readings for this course. Be sure to integrate a biblical perspective into your essay and format your essay according to APA requirements

Reading:

Wheelan, C. (2010). Naked economics: Undressing the dismal science.

• Chapter 9: Keeping Score
• Chapter 11: International Economics
• Chapter 12: Trade and Globalization

Bonello, F., & Lobo, I. (2015). Taking sides: Clashing views on economic issues (16th ed.).

• 3.1 Is a Fair Trade Policy Superior to a Free Trade Policy?