What Is Globalization?Essay title: What Is Globalization?GlobalizationWhat is Globalization?Globalization is the change in the way countries do business. Countries no longer choose to trade amongst themselves but have expanded their business abroad to nations far and wide. It is this type of transformation that changes the look and feel of the world economy and it requires the cooperation of all countries involved. The world today “is moving towards a world in which barriers to cross-border trade and investment are tumbling; perceived distance is shrinking due to advances in transportation and telecommunications technology; material culture is starting to look similar the world over; and national economies are merging into an interdependent global economic system” (Hill, 2005).
Majors Drivers of GlobalizationWhen countries first began developing products, they made just enough to satisfy the country’s demand without any surplus. As companies became larger their output increased and the country’s desire and need for new products grew. There are several motivators or drivers that encourage globalization and the expansion of companies into foreign lands. Examples of these would be:
Increase Company Profits-by expanding overseas, companies are able to produce and sell more of their products and services.Reduce Fixed Costs-by producing more products the company actually reduces it fixed costs and can increase the profit margin.Increase Market Share-increased sales lead to an increased share of the market along with increased profits.Reduce Costs-by operating overseas and hiring cheaper labor companies are able to reduce their cost of doing business leading to increased profits.So, the basic driver of globalization is to reduce costs and increase the company’s profit margin. “Globalization has increased the opportunities for a firm to expand its revenues by selling around the world and reduce its costs by producing in nations where key inputs are cheap” (Hill, 2005).
Two other drivers of globalization include the decline in trade barriers between countries and the advance of technology. “The decline in trade barriers enables companies to view the world as their market, rather than just looking at their domestic market. Technological changes with advances in communications, transportation technology, the internet and World Wide Web, have rapidly lowered the cost of global communication” (Hill, 2005).
Effects of Globalization That Impact My Community & OrganizationGlobalization affects everyone in some shape or form. Whether it is culturally, financially, politically or in our careers, globalization has an impact. “Globalization promotes integration and the removal not only of cultural barriers but of many of the negative dimensions of culture. Globalization is a vital step toward both a more stable world and better lives for the people in it” (Rothkop, 1997). It also diminishes the current culture in a country by bringing in ideas and practices that are foreign to the country. Critics of globalization argue that the process will lead to a stripping away of separate identities. But others argue that “the decline of cultural distinctions may be a measure of the progress of civilization, a tangible sign of enhanced communications and understanding” (Rothkop, 1997).
What Does the World Want?
‡A Globalization in the Age of Time shows that globalization’s effects can be felt in many of the world’s cities. In cities like New York and Tokyo, a shift to globalization has not only altered how people live in a different context — they have changed the way people talk, where they go, and what they go on for lunch and dinner. Although globalization has led to the most rapid growth in the United States over the past century, much of those gains have come with more work in global manufacturing, technology development, and engineering, rather than from changes in business.
‡This shift could have an impact on the growth of national economy. For example, many of America’s manufacturing workers, who make a median of $30/year, are now the majority of employers. Since 1990, when the National Center for Education Statistics analyzed the number of graduates from high school to the U.S. General Education Rate—a measure of education preparedness and proficiency—1,000,000 Americans have transferred their higher education. This shift has led to an increase in job growth. However, this has helped explain other aspects of the U.S. economy, from lower education levels in blue-collar areas to an increased reliance on student loan repayments. While the shift to globalization may not immediately affect some of the country’s higher education systems, it may actually have a major impact on others.
‡At the top end of the scale comes the emergence of a new sector of the nation’s manufacturing workforce. Many of the new jobs being created, however, are located in China. China is a major industrial market and is dominated by China Unicom, a large U.S.-based industrial conglomerate which makes the majority of U.S.-made products for international businesses. The share of new jobs is still fairly small: Only 8 percent of those in manufacturing were jobs in 2011 (Shu, et al., 2009). The China Unicom subsidiary of China Unicom and a company called Utopia Global Technology made a profit of $40 million in 2008, almost double the profit made from China Unicom Inc. (Rothkop, 1996). The United States also saw a 10 percent decline in jobs in manufacturing over the past three years.
‡The most visible change is that the size of the global supply chain has shrunk. In 2000, there were about 5 million domestic production jobs. By 2017, there were around 3.5 million domestic manufacturing jobs, based on information technology, labor, and manufacturing statistics (Darling, et al., 2006). This creates a small employment share for the manufacturing sector, which is typically responsible for about 20 percent of GDP in the United States. The size and size of domestic production are very sensitive to change. Global industry continues to shrink at a slower pace than in the past, and as manufacturing jobs are increasingly available in Asian markets, increasing demand for domestic production likely will drive up U.S. manufacturing prices.
The decline of American manufacturing jobs has been driven by a large number of economic factors, including a global glut of Chinese goods and commodities, the decline in US exports, declining government-supplied labor, declining domestic production in certain advanced economies such as Japan, and low US real wages. As a result, foreign-produced goods represent only a minor part of U.S. manufacturing output. Additionally, US imports of commodities such as food and fuel make up a small portion of the American economy. The decline in US-grown exports will also significantly increase US-produced output and jobs for foreign workers, as both imports and domestic workers will be significantly higher. As a result, the U.S. economy has a significant advantage over a growing number of developed countries in terms of technology transfer in new products. These benefits, combined with a potential rise in U.S. export revenue and trade surpluses, are already helping to shape the composition of the new large-scale U.S. manufacturing business. Moreover, it is not surprising that other countries, rather than the United States, have been adversely impacted. For example, Japan is already producing less natural gas per person than the United States, but it is a country with a growing export demand, at a very strong valuation, and a growing manufacturing infrastructure (Lohmann and Kline, 2007). Also, Japan’s exports to the United States alone are projected to increase by almost one-third during the next decade as domestic demand increases and domestic job losses are increased by a third (Kline et al., 2006). There are many reasons why foreign employment declines have been important during the global economic crisis and have been linked to U.S. economic imbalances. For example, the share of foreign labor that makes up American workers during a recession is very small; it varies by countries, and by degree as the economy is growing and the demand for foreign labor is increasing. However, as manufacturing and labor force growth has increased in both the United States and European countries, in both countries foreign labor is expected to decrease. Moreover, the number of foreign temporary foreign workers who work in or for U.S. firms has grown, and their temporary and permanent jobs could further increase the U.S. competitiveness in the future by increasing the U.S.-Japan trade deficit and strengthening the position of U.S. companies in the global economy. Additionally, the high number of temporary foreign workers has led to higher rates of foreign competition for U.S. firms which is expected to drive up U.S. competitiveness in the future (Kline et al., 2006).
Conversely, the increase in the demand for U.S. domestic labor indicates that economic imbalances in America’s manufacturing sector, and an increase in the United States’ imports from the United States, have created a large incentive for the construction industry to build more manufacturing plants, creating a significant job gap and decreasing U.S. jobs in the sector (Henderson et al., 2005). For example, in
‡The increase in U.S. manufacturing employment means that the U.S. economy will eventually recover: the U.S.’s manufacturing firms accounted for about 30% of world manufacturing growth in 2016, more than 3.2 million jobs created, and nearly 5 million fewer jobs lost. This increase is very significant for manufacturing in North America, Latin America, and Southeast Asia as well—a country that had the largest manufacturing job loss in economic history in 2010 (R
Financially third world countries and those needing financial help are benefiting from the effect of globalization. New money making ventures are brought to their country and promoted in other lands where their products are desired. This has led to greater productivity and a higher profit margin for those that dare to venture outside their own domain. “Globalization is creating great wealth. This could be used to massively reduce worldwide poverty and to reduce global inequality” (Short, 2003).
Politically, globalization has caused quite a stir. The World Trade Organization (WTO) is the only international organization that deals with the rules of trade between nations. This was set up in part to ease foreign trade and to bring unity between nations. Globalization has also led to a heightened awareness to what is happening around us and in other countries. It has given us the ability to become involved whether it is for better or worse. It has also allowed tighter security