Ecconomic globalization - Essay Example

How Globalization with Increasing Producers and Consumers Affect US Economy The Impact of Globalization on the USA Economy Globalization is a phenomena that can be widely described as the increasing disintegration of the national boundaries in favor of the global economy, worldwide political integration and shared culture (Hanson, 2006). Globalization has had varying impacts on the economy of the United States of American. The four areas of the economy that has been impacted on by globalization are growth, employment, prices and trade (Hanson, 2006).

This is due to the realozation that globalization leads to increase in both the number of producers and consumers. Globalization has led to economic growth by increasing the aggregate demand which increases exports as well as increasing aggregate supply through higher levels of investments that are associated with globalization. Globalization has led to destruction of jobs in the manufacturing sector and increase of jobs in the service sector. In addition to that, globalization has led to the increased demand of skilled labour and reduced demand of unskilled labour.

This is because firms have shifted their some of their productions stages to countries with cheap labour only leaving the ones that required highly skilled man power within the USA. This has led to widening income gap in the United States of America (Hanson, 2006).The high competition levels that results from globalization has led to reduced prices for traded manufactures in the USA because the country can source source from around the world.Globalization has impacted positively on export and import trade in the USA.

This increased trade has led to increase in the GDP of the country. However the effect of globalization on balance of payment is uncertain and it hugely depends on the relative growth rates, exchange rates and inflation.ReferencesHanson, G. “Localization Economies & the Globalization of Production," NBER Working Paper No. 4744, May 2006: pp. 1266-78.