How globalisation can have different impacts on various groups within the same country - Essay Example

? Topic: Lecturer: Presentation: Introduction Improved transport and communication has facilitated trade between countries turning the world into a global village prompting a lot of debate with proponents arguing that globalization is essential for economic growth and elimination of poverty while opponents argue that globalization is undermining the role of the state hence eliminating sovereignty of nations. There is no agreed definition of globalization. Boudreaux (2008); Globalization 101 (2011) define globalization as the ‘process of interaction and integration among people, companies, governments of different nations driven by international trade and investment aided by information technology’. He argues that the advancement in technology enables suppliers in one part of the globe to satisfy the demands of consumers in other parts of the globe thus increasing the magnitude of globalization. Boyes & Melvin (2009) view globalization as increase in cross-border flow of goods and services, and increased mobility of technology, information and individuals. According to Lerman & Schmidt (2010), globalization is not a new phenomenon but has been in existence since the First World War but has increased in speed and intensity in recent past. It leads to convergence of nations politically, economically, socially and culturally. It is characterized by increased international trade, foreign direct investments, capital flows, migration of population, and flow of knowledge. It has led to overdependence among nations especially poor countries dependence on rich nations. Globalization has opened doors to trade by removing barriers resulting in a lot of competition in domestic markets and providing opportunities for firms to expand into the global arena. There are also increased mergers and acquisitions as competition increases as well as establishment of multinational companies. Globalization has also been in the lime light as the cause of the recent financial crisis due to integration of financial markets and increasing ineffectiveness of the monetary and fiscal policy. Many anti-globalization campaigns have been on the rise as it is argued that it enhances income inequalities and unemployment (Ehrenberg, 1994). The paper discusses the effects of globalization on various groups in USA. Globalization in USA USA is considered as the most globalized nation. It is a capitalistic state or free market economy and hence governed by the forces of demand and supply and open to competition from all quarters nationally and internationally. The value of foreign trade in USA continues to rise as the effects are felt everywhere especially the less developed countries. For example, the value of merchandise exports 1950 was 4% of gross domestic product (GDP) same as that of merchandise imports. Recently the value of merchandise exports is 8% of GDP while that of imports is 11% of GDP. The exchange of services which was not common in 1950s is now in existence enhanced by improvement in information technology. Outsourcing in 1960 accounted for only 1.7% of the value of services produced in USA and sold to foreigners but by 1997 it had risen to 5.1% showing how globalization is extending at fast pace (Boudreaux, 2008: 8). Deregulation of the financial sector is another phenomenon in USA. The financial sector has thus increased in fragility leading to financial instability and vulnerability to external shocks. The deregulation of banking industry has partly been blamed for the current global financial crisis. The banks engaged in sub prime mortgages and securitization of the mortgages without a limit leading to collapse of the institutions as a result of bursting of the housing bubble. This effect was transmitted to other parts of the economy and the world as a whole through integration of world financial markets (Brewer & Boyd, 2000). According to Pryor (2000), there is a change in the location of trade transactions in the USA from business people to multinational companies. He alleges that in 1990s two thirds of all exports and 40% of import transactions were carried out by multinational companies. These MNCs have also changed the face of the labor market as they continue to employ workers abroad and in home country and making the human resource management work complex. The MNCs have also contributed to increased entry of immigrants into US and shifted the direction of trade. Lerman & Schmidt (2010) noted that 1.1 million legal and illegal immigrants enter every year into the US. Trade with developing nations has been on the rise while trade with European nations has declined partly due to cheap production by MNCs in developing countries through utilization of cheap labor. Globalization in the US is also characterized by capital outflows. The liberalization of the capital markets is to allow inflow of capital into the country. However, due to ineffectiveness of the monetary policy due to globalization, interest rates are difficult to control. The domestic investors thus invest their capital in more profitable areas where interests are low leading to capital outflows and foreign investors shy away from high interest rates resulting in reduces inflows leading to net outflow of capital (Stiglitz, 2004). Globalization and international cooperation between nations has seen US go into war with various nations such as Afghanistan and Iraq among others. This may affect economic and political stability of the nation. International agreements and treaties have also been on the rise to eliminate barriers and promote trade. They have led to formation of organizations such as world trade organization, international labor organization which governs labor standards among others. The anti-globalization activists argue that such treaties reduce the ability of a nation to enforce The Impact of Globalization Globalization impacts differently on different groups within the same country. It is advantageous to some but disadvantageous to others. The investors and businessmen take advantage of globalization to expand their businesses and choose the appropriate place to locate their businesses. The youth have the capacity to use new technologies to interact worldwide and explore new opportunities and exchange cultures. Women on the other hand, have improved participation in the laborforce but they continue to experience inequalities especially due to exploitation in sweatshops created by MNCs. The laborforce is also affected by globalization through wages and distribution of income. The work of human resource specialists has also become very complex as organizations continue to expand and establish branches countrywide. The government is also not spared by globalization. It has to take into account the various agreements, treaties and restrictions that govern international relationships when formulating policies. Government Globalization has a great impact on how the US government formulates or implements its policies. Pryor (2000) argues that government policies have to take into account the obligations it has to other nations. It has to consider environmental standards, labor regulations, trade rules among others. For example, the international labor organization sets the standards for labor practices. The rules of the World Trade Organization hinder the government from imposing its own tariffs and other trade restrictions it deems fit. On the other hand, it hinders trading partners from imposing restrictions that would hurt US exports to that nation hence it is advantageous to the government. This restriction on the government to act on its own is seen as an attack on a country’s sovereignty hence mass campaigns against globalization. It has been argued that globalization leads to the decline of effectiveness of the fiscal and monetary policies prompting economic instability hence making the country vulnerable to external shocks (Boudreaux, 2008; Buchanan, 1998; Brewer & Boyd, 2000). The fiscal policy is aimed at inducing aggregate demand and consequently national output. However, there is no control as to its effects as the market is free; external factors may hinder its realization. The government may also wish to control the economy through use of monetary policy which is the case with US. The Federal Reserve tries to maintain an inflation target by setting interest rates. An expansionary monetary policy increases the money supply in economy by lowering interest rates. This in return encourages outflow of capital due to the reduced interest rates leading to depreciation of exchange rate (Pryor, 2000). If investors speculate that the dollar will increase in value, they buy the dollar and sell it when exchange rate appreciates leading to inflow of foreign capital and consequently appreciation of the dollar thus encouraging imports and discouraging exports. This may lead to trade deficit. In the long-run therefore, the monetary policy authorities are unable to control the amount of money in supply due to integration of the money market where the dollar is exchanged freely in the market. The monetary policy therefore becomes ineffective leading to economic instability. Investors Globalization is characterized by increased flow of trade, labor and capital. Due to increased trade, there is a lot competition in domestic markets. Cheap imports compete with domestic products forcing some firms out of the market. Some other investors move their businesses to cheaper places while some establish branches in other nations (Stiglitz, 2004). Some organizations get involved in cross-border mergers and acquisitions so as to compete effectively in the domestic market or reduce competition by controlling the market. Multinational companies therefore have continued to emerge to take advantage of new opportunities and cheap labor especially in less developed countries. Companies like Walmart and Nike has branches all over the world especially in Asia. These multinational companies have been accused of operating sweatshops where they engage cheap labor and low labor standards at expense of their home country. Whereas investors have benefited in use of cheap labor by transferring most manufacturing jobs to cheaper nations, there has been increased unemployment in the US. According to Lynch (2003), the US has lost close to 3million manufacturing jobs from 1980-2000 due to international trade and investment abroad which are competing away manufacturing jobs and later exporting them. The US graduates are therefore unable to find employment whereas the same degrees are demanded by other countries due to migration of manufacturing jobs to those countries. According to Brewer & Boyd (2000), the US has converted from raw material exporter to raw material importer. In 1996, imports accounted for 38.5% of domestic production. Imported inputs accounted for 8.6% in 1979 and 13.9% in 1990 (5). Globalization and Women Globalization is supposed to lead to economic growth and consequently improved living standards for all. Despite economic growth and poverty reduction, women continue to be economically discriminated and marginalized. It is apparent that women participation in the laborforce has continued to grow as women fight for their rights and as a result of increased knowledge and awareness brought about by globalization through improved communication, information technology and interaction with people of different cultures. According to Blossfeld et al. (2005), female laborforce participation has increased from 60% to 80%. Women also participation is also due to flexibility of employment contracts in US. They thus work full time or part time (Suarez-Orozco & Qin-Hilliard (2004). The emergence of MNCs has created opportunities for women but they get low wages especially in textile industries or sweatshops and work in poor conditions. They are also found in service sector whereas men are found in manufacturing sector. Deregulation of government institutions due to globalization affects women as they are mostly found in government sector offering services. Globalization also has led to increased migration of workers in search for jobs especially women. They are thus lured and trafficked to rich nations like US in promise of better jobs but are sexually exploited through prostitution and pornography. Most of these immigrants are not educated and don’t know foreign languages hence find it difficult to complain or defend themselves. Other immigrants who are less educated compete for jobs with the less skilled American natives thereby pushing wages down even further (Lerman & Schmidt, 2010). Globalization and the Youth The youth are the most affected by globalization as they are acquainted with new technologies, are flexible and adaptable hence can make use of emerging opportunities to their benefit (Blossfeld et al. 2005). The youth worldwide are involved in exchange programmes hence interact with diverse cultures and learn more hence able to make decisions. They also make use of information technology to learn more about the world. Through internet, they are able to keep in touch with outside world and can work anywhere as they are able to communicate with their parents. However, despite these advantages brought about by globalization, the youth encounter many problems. First is the changing nature of the job market. It is difficult to find labor nowadays because manual jobs have been replaced by machines as technology advances. Jobs in the service sector have been automated especially in communication leading to loss of jobs. Industrialization in America also led to loss of jobs in manufacturing sector especially due to increased importation of inputs to produce goods for export (Ehrenberg, 1994). Trade liberalization has contributed much in joblessness due to increased competition and outsourcing of semi-skilled jobs in call centers. Foreign investors establish jobs in cities leading to mass migration of the youth to urban centre especially in Latin America (Suarez-Orozco& Qin-Hilliard, 2004). The voice of young people against unequal distribution of wealth and environmental degradation is hampered by their diverse opinions, interests and beliefs. Workforce Due to globalization, the workforce has become very diverse. The emergence of MNCs has complicated the situation and the workforce now comprises of nationals and international employees. Organizations hire employees and send them to the headquarters or transfer employees to foreign branches where there is different culture and rules. This has resulted into more dynamic human resource management activities to deal with diverse culture. Innovations are also apparent as people learn from other nations different tasks. The earning gaps though keep rising in the US. In 1993, real pay of bottom decile fell by 21% for men while top decile real pay rose by 8% (Lerman & Schmidt, 2010). The poor thus continue being poor and the rich richer even as the world becomes a global village. Conclusion The issue of globalization continues to spur a lot of debate as its advantages and disadvantages. Proponents believe that globalization helps poor countries to develop while opponents argue that free markets have created MNCs at the expense of local firms and local workforce and the same time eroding the sovereignty of nations. The US has experienced a lot of globalization since the First World War especially after the League of Nations was formed though it was not a member. It has deregulated the financial sector, engaged in free trade, and experienced capital, labor and information flow which have benefited the citizens as well as brought problems such as the financial crisis. References Blossfeld, H., Klijzing, E., Mills, M., Kurz, K (2005). Globalization, Uncertainty and Youth in Society. USA: Routledge. Boudreaux, Donald (2008). Globalization. Westport, CT: Greenwood Press. Boyes, W., Melvin, M (2009). Fundamentals of Economics. Boston, MA: Houghton Miffin. Brewer, T & Boyd, G (2000). Globalizing America: The USA in World Integration. UK:Edward Elgar. Buchanan, Patrick (1998). The Great Betrayal: How American Sovereignty and Social Justice Are Being Sacrificed To The Gods of a Global Economy. Boston: Little, Brown. Ehrenberg, Ronald (1994). Labor Markets and Integrating National Economies. Washington, DC: Brookings Institution. Globalization 101 (2011). ‘What is Globalization?’ The Levine Institute. 19 April 2011. http://www.globalization101.org/What-is-Globalization.htm. Lerman, R., Schmidt, S (2010). ‘Trends and Challenges for Work in the 21st Century: An Overview of Economic, Social and Demographic Trends Affect The US Labor Market’. United States Department of Labor. Available at http://www.dol.gov/oasam/programs/history/herman/reports/futurework/conference/trends/trends.htm. Accessed 18 April 2011. Lynch, Katherine (2003). The Forces of Economic Globalization: Challenges to the Regime of International Commercial Arbitration. 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