１ I would like to thank the editors at Bunkyo University Language and Culture Research
Center for their assistance and constructive feedback. The comments proved helpful in completing this paper.
A discussion of the trend of Globalization: what it is, how it’s affecting us, and how we can succeed in the era of globalization
Kregg Johnston
グローバルに生きる
グローバリゼーションの傾向を検討する；グローバリゼーションとは何か、 グローバリゼーションは如何にわれわれに影響を与えるか、 そしてグローバリゼーションの時代をどの様にして乗り越えていくことができるか クレッグ・ジョンストン Living Globally に関する本論文は、グローバリゼーションのトレンド とは何か、そして、人々の生活にどのように影響を与えるか、先進国と 開発途上国において、いかにグローバリゼーションは経済、国家、労働 者に影響を与えるか、そして、最後に、いかにして労働者、企業そして 政府がグローバリゼーションによってもたらされた変革を受け入れるこ とが出来るかについて論考を試みたものである。グローバリゼーション、 地域市場や国内市場が国境を越えて拡張した、グローバル市場は多くの 国における経済成長を促した。 “Globalization”という英語の示す状況は、英語を話す国々の人々だ けでなく、世界中の人々の生活において同時に影響をおよぼすものであ る。この傾向は専門化と交易によって形成される。グローバリゼーショ ンは経済を経済成長、低インフレーション、そして、就労機会の拡大な どの確信ある方法によって経済に影響を与える。しかし、売上マージンEconomic growth, one of the main macroeconomic goals in any economy, is one of the main benefits gained from globalization. Economic growth is important for a number of reasons. First, when the economy grows, people are better off than before. There are more job created when the economy grows. As a result of increased business activity, companies need more workers to make more products or provide more services than before. As people are working more, they have more money to spend for products and services that they need. As these activities increase overall wealth is created and standards of living rise. Japan and the four Asian Tigers of Hong Kong, South Korea, Taiwan, Singapore all achieved remarkable growth rates from the 1970’s to the 1990’s, which resulted in higher
の低下、失業率の上昇、国内の市民間における貧富格差の拡大も生じる こともある。グローバリゼーションは企業における利益の向上、製造費 用の低減、そして先進技術導入の促進を手助けする影響も与える。他方 で、グローバリゼーションは企業の過当競争を生み出し、異なる文化の 統合を困難なものとし、失敗の危険を高めることとなるかもしれない。 労働者にとって、グローバリゼーションは就労機会の拡大とともに、 高収入や自身の技能や能力の向上の動機づけとなるだろう。しかし、他 方で就労への過度な競争や雇用者による過当な労働効率性の期待が表面 化し、雇用の不確実性が増加した。これらの変化に対応して、労働者は 競争力を保持するために、現在の能力を維持し、生涯学習を行うことが 重要となる。企業においては、経費削減と効率化運営、市場環境の調査、 好機を生かすことが必要とされる。政府においては、第三者による経済 活動の影響に限界がある中で経済成長をコントロールすることが重要で ある。また、生涯学習を続ける国民への支援ならびに奨励が必要とされ る。
standards of living and per capita GDP. This growth also made possible modernization of their productive capital resources in the form of modern factories equipped with the latest technology. These economies, along with China in the last 15 to 20 years, were able to grow because of a focus on exports, made possible by the forces of globalization.
This paper will explore the phenomena of globalization. First, an explanation of what globalization is and what is causing it to occur will be offered. Then some of the effects, both positive and negative, from the spread of globalization will be discussed, and finally, how to adapt to the changes brought about by globalization will be addressed. What is Globalization?
Globalization as viewed from an Economics perspective can be categorized as the creation of one world market free of barriers to entry, with free movement of resources. Perfect globalization, possible in theory, is the situation where worldwide free trade exists between all countries without any restrictions in the exchange of resources and currency. This situation is unlikely to occur as different governments and culture are unlikely to agree on one global standard of trade and conditions for membership, nor are such divergent countries likely to relinquish their authority and ability to manage their own individual economies. One needs to look no further than The European Union （EU）to see just how difficult reaching agreement among different countries can be. In The EU, issues of national budget austerity among
profligate member states, such as Greece during its currency crisis, as well as resentment by fiscally sound members over economic support to states requiring financial assistance to remain in the Union have created friction among member states. The task of building worldwide consensus on economic policy would be much more difficult to fathom. Globalization is a term that one can easily encounter in the media today, but what exactly does the term mean and how is it different from Internationalization. According to Merriam-Webster.com, global is defined as, “involving the entire world” and “involving all of something especially a computer system, file, etc.” It is an adjective commonly found in both spoken and written English. Common compounds that include the word are as follows: global economy, which means the economy of the whole world; global warming, which means an increase in average temperatures for the whole world; and Global Positioning System（GPS），which means a navigation system that uses satellites
to determine the position of things anywhere in the world.
The use of the world globalization has taken off in recent years. In fact, Collinsdictionary.com shows that the recorded frequency of use of Globalization had more than doubled between 2006 and 2008 and before that in 1989, was nearly zero. This trend of increased usage is expected to continue as the trend of globalization becomes more prevalent. A search of the word “globalization” on Google’s Ngram Viewer, which graphically displays word frequency in it’s Google Books Corpus returned similar results rapid increase in use of the
word between 1989 and 2008, the latest year that returns a search result. Certainly, globalization is not a new phenomena, but the use of this term take off in the media over the last 30 years or so.
The increased use of the word could be a reflection of the variety of ways in which it is used to mean different things to different parties. Some see globalization as a political process of domination and submission, while others see it as an economic process of divergent markets consolidating into one single market for the whole world, yet others see it as technologically driven. All three interpretations of this trend have their validity. However, the focus of this paper will be on the second view of globalization, from an economics perspective. It is the belief of this writer that the economic rationale for this change is more compelling that the others. Economic factors, such as the expansion of markets, and the pursuit of profit, play the most important role.
Next, an explanation of an example on how globalization has changed shopping choices in supermarkets through specialization and trade, what factors made this possible, and how those same forces are found in the market for labor.
How globalization has affected the lives of people in developed countries what is behind this drive to globalize
Visit any large supermarket in a major city in a country that has an open trade policy, such as a supermarket that you would find in
the US, Japan, or Australia, for example and you can observe a wide range of products on offer from divergent locations across the world. For example, at a nearby supermarket in Japan, this writer can find a wide range of different national products: cheese from France and Italy countries, meat from the US or Australia, cookies from Germany, lemons from New Zealand, avocados from Mexico. This is of course in addition to the domestically products that are also available. Having foreign produced goods available makes it possible to purchase such goods when they are no longer in season in the host country, or in some cases, make it possible to obtain some produce items year round, such as squash （usually harvested in summer or fall），or tomatoes （traditionally harvested in summer）．The advantages of having such a wide range of products is obvious: the convenience of not having to wait while the products are in season. Also, you aren’t limited to what is grown locally or nationally. This can lead to health benefits as well as you are able to obtain a wider variety of products than before. Before the advent of the supermarket, products that consumers could buy were limited to those that could be brought to market before spoiling. Therefore, the vast majority of items sold were produced locally within a reasonable distance whereby the products could be brought to market. Certainly, in the past the range of choices was much narrower than today, which greatly limited what people could obtain to those products which were produced nearby and the local shops where they were sold. The creation of supermarkets, was an expansion on the producers side, from small business grocers or
farmer’s markets where individual households or businesses could get the products that they needed to a larger business strategically located where consumers could get a wider range of products from further away. The supermarket made available products from farther away places. This development gave consumers more choices of products to buy so that they weren’t limited to those produced locally. This same process has continued to where products from distant countries have become available to consumers at competitive prices. This change was made possible as a result of specialization and trade. Supermarkets developed expertise in buying perishable produce by seeking out different produces from a wider range of producers and farmers from around the country and this enabled the supermarket to find better value, lower price and higher quality and wider range than was available earlier. Later, the suppliers of the supermarket included foreign farmers and producers. From this, the supermarkets were able to take advantage the benefits in sourcing from a larger market than before, which allowed the supermarket to obtain the products at lower prices as a result of competition between both domestic and international suppliers.
In economics, the law of demand states that as supply increases, the equilibrium price will be lower and the equilibrium quantity will be greater, other variables held constant. The supermarket is able to take advantage of and increase in supply by accessing a larger market. However, many good that the supermarket provides are perishable, so
advances in transportation technology which enabled the supermarket to get the goods from far away faster and more cheaply so that they could transport it to the stores for sale to the public before spoiling, were also important in making this possible. Many supermarkets, at first, set up their own distribution infrastructure in-house, but later it also became possible to outsource it to companies specializing in transportation.
The advantages of having two means of distribution for the supermarkets are that they can control distribution by performing that task internally, or rely on a specialist who could provide this function as a way of reducing operational costs. As supermarkets are able to reduce both the costs of the groceries and transportation than before, they can offer those products at lower prices or at the same prices even during times of moderate inflation. One reason why supermarkets have become popular with consumers is their low prices, wide selection, and convenience of shopping. Supermarkets are able to offer a wider range of products than small grocers or farmer’s markets, which forced those businesses to closed or enter a different niche through product segmentation or by providing more personalized services. No longer able to compete with supermarkets on price or product range, the smaller businesses had to find an segment of the market where they had a comparative advantage and could serve that market more efficiently. One final advantage that the supermarket wield is the ability to buy in bulk in order to obtain economies of scale. Most supermarkets are part of a franchise and
can purchase the supplies for all branches centrally. By purchasing in bulk they can obtain volume discounts that aren’t available for smaller businesses, such as small grocers or farmer’s markets.
This was all made possible as a result of globalization. Through specialization and trade in an open market with minimal trade barriers and restrictions, producers can offer products to market more efficiently and reduce costs and consumers can benefit by having a wide range of products available at lower prices. Competition forces producers to keep costs down and margins smaller than in a market with little or no competition. Specialization allows producers to gain knowledge and expertise needed to offer the goods and services to market at an efficient price. This is how the market operates if it is allowed to do so without restrictions imposed by governments. It’s the “invisible hand” as pointed out by Adam Smith in his seminal book,
The Wealth of Nations.
Surviving in an increasingly competitive and specialized marketplace requires self-assessment and reaction to changing situations. When one participant gains an advantage in efficiency or cost, the other participant have to react to that change by adapting in a similar way or doing something different to remain competitive . The participants that can’t react or react too slowly can get left behind and may need to reassess their ability to compete in the market. This situation forces the companies to continue with what they are doing, or refocus in order to appeal to a different market segment, or in the worst case,
get out of the market because of an inability to compete. Competition keeps the producers on their toes and forces them to adapt to changing conditions and situations. Companies need workers who can help them compete in the marketplace. The companies need labor that is flexible and efficient. They also need workers with specialized knowledge who can improve company operational efficiency and who can contribute to company productivity. On top of that, the creative capacity of workers is becoming increasingly important. New ideas and strategies are regularly needed and the most likely source is from their employees. In short, companies need workers who can help them gain a competitive advantage.
Similar to how companies compete in the marketplace for consumers, workers also have to compete against other suppliers of labor. Workers are selling their labor to companies. Workers with specialized knowledge and efficiency are able to offer their services to a wide range of companies because they are in demand. On the other hand, workers lacking the specialized knowledge or having dated knowledge or skills are less in demand and are less likely to find gainful employment. The new global working realities can be especially challenging for the undereducated and elderly because they require learning and adaptation to new processes, technology and working situations. Both workers and companies have to remain vigilant and adapt to the changing environment. Kotter （1995）pointed out that in the face of global competition, successful managers in the USA have strong leadership skills, have strong competitive drive to succeed, and
are forward thinking in being able to identify important trends in their fields. Workers with these qualities are more likely to add value to their firms and be highly sought out by firms to help them compete globally. These characteristics common among successful leaders result from the ability to learn and adapt.
The expansion of markets and the increase of worldwide trade creates both opportunities for those who can adapt and problems for those who are unwilling or unable to. Next, this paper will address some positive and negative affects that globalization has on the economy, companies, and workers.
Effects on the economy:
The following are some beneficial economic effects resulting from becoming more globally focused. Globalization can lead to higher rates of economic growth and in increased wealth in the countries involved. Japan, the Asian Tigers（Hong Kong, Singapore, South Korea, and Taiwan）all achieved remarkable economic growth during the thirty year period between 1960 and 1990. According to Sarel （1997），the Asian Tigers grew in terms of GDP per person at an astounding six percent per year over the thirty year period. In contrast the average growth rate for the rest of the world was just over one percent per year over that same time period. Three factors are mostly responsible for these amazing rates of sustained growth experienced by the Asian Tigers: investment in capital, focus on exports, and productivity gains from advances in technology.
The Asian Tigers and Japan in its post WWII reconstruction and development were able to benefit from open markets worldwide and their ability to accomplish large trade surpluses. A trade surplus occurs when a country’s exports exceed its imports over a given time period. Increased exports is one way that an economy can grow. This growth is made possible through the emergence of new export markets for the exporting firms. It can also enable firms greater access to the worldwide supply of resources of production in the factors of production market, including land, labor, and capital, which can aid these firms in the production of goods and services, allowing them to cut cost and consequently lower prices, which can increase their competitiveness in the marketplace. As companies have access to more markets, the firms will likely need to hire more workers to help them serve these new markets. This situation can help reduce unemployment, especially for workers who have the skills and knowledge that the exporting firms need.
Moreover, globalization can reduce the risk of an economy suffering from high rates of inflation. In a study of 21 OECD member countries over a forty-year period between 1970 and 2010, Chang & Tsai （2014） concluded that integration with other economies globally had a negative correlation with inflation in most of the countries studied. In other words, more globally dependent economies had lower rates of inflation over the period studied, while those economies that were less dependent suffered higher rates of inflation on average. Through globalization, firms gain access to the latest technology and
lower cost resources than those that are available in their respective domestic markets. Through the lower costs and improved efficiency in production of the goods and services the firms’ costs will be lower and productivity can be improved which can result in improved efficiency of production or lower prices, or both.
Conversely, Globalization can have negative economic effects for countries involved. First, it can spell trouble for domestic businesses as they face competition from foreign firms. This increased competition can result in a downward pressure on profit margins, increased losses, and contraction in the face of such competition. Globalization can also lead to higher rates of structural unemployment, as certain kinds of work are transferred to countries which have lower cost resources. Companies may need to restructure their operations and eliminate redundant or non-competitive departments, resulting in the elimination of jobs. If there are a large number of workers whose jobs are eliminated and this situation extends over half a year, it could result in negative economic growth, or a recession. In developed economies, jobs in manufacturing, or jobs utilizing unskilled labor are the most likely candidates for offshoring. However, in developing countries, the job losses resulting from globalization often occur because either lower cost factor markets emerge and the investing company decides to move production to the lower cost country, or as new technology is adopted in the developing country, gains in efficiency reduce the number of workers needed to do each particular job, which can result in structural unemployment in those countries.
Another source of job loss for the workers in developing countries is when production costs begin to rise as a result of economic growth in that country where the goods or services are being produced. The rising costs can forces the investing firm to seek out other lower cost factor markets in order to manage costs or move production back to the home country. For example, Yan S. （2016）pointed out that rising labor costs in China and productivity gains in the US are eroding China’s previous manufacturing cost advantage. This situation is forcing companies that invested in factories there to seek out other lower cost countries for production of goods or bring production of those goods back to the home country. Sirkin H., Zinser M., & Hohner D. （2011） concluded that American manufacturing capacity for goods destined for the North American market is expected to increase over the next five years and beyond. The two main reasons for this are rising labor costs in China which have not completely been offset by gains in productivity and large productivity gains by US manufacturers, especially in the Southern states of Tennessee, South Carolina, and Alabama coupled with lower energy costs and a weaker dollar. Some examples of US companies returning production of goods back to the US are NCR, Coleman, and Ford Motor Company.
One more negative effect from globalization is that it can widen the wealth gap in countries that are more deeply involved in global trade. This holds true in both developing and developed economies as more opportunities become available to workers who have the needed skills and knowledge and those who can gain new skills and knowledge that
they lack. Workers who are undereducated, lack the skills and training needed by the companies, and can’t learn those skills will have much more difficulty finding employment opportunities. Maskin （2015） posits that globalization increases income inequality in developing countries, rather than reduces it. The main reason for this is that low skilled labor in developing countries is the least productive because of a lack of training and education. Moreover, low-skilled workers lack access to resources needed to raise skill levels, education, and productivity unless such opportunities are made available by governments or NPOs. Through globalization and trade, those workers are at a big disadvantage when having to compete with other more productive labor both domestically and internationally. Despite economic development of their countries and despite the low cost of their labor, these workers are at the biggest disadvantage and benefit the least from the forces of globalization. In developed countries, those workers who can’t adapt to the changing needs in their home countries or who are unwilling to ply their trades in foreign markets, or who are unable or unwilling to gain new skills and knowledge in their field will find employment harder to come by. Globalization rewards those firms and workers who have the flexibility to adapt to the changing needs in the face of increased competition. Those that fail to adapt will be left behind.
Effects on Companies:
For companies, globalization opens up new markets to sell their goods and services. Through selling in these new markets, companies
can increase revenue, which helps to increase their profitability and owners equity. By finding new markets, these firms can continue growing, which benefits workers, owners, and the economy of the home country through GDP growth. Moreover, globalization makes it possible to access foreign supply of resources which can help drive down costs of production and make it possible to produce at lower prices or produce more efficiently. Finally, foreign direct investment is one crucial activity that facilitates global trade. One benefit from foreign investment is the transfer of production technology from the firms investing and the local suppliers of those firms. The technology transfers can introduce to local companies new ways of producing goods and services and raise productivity in the host country. These companies can gain new ideas from their tie ups with the foreign investors and this can aid local companies’ operations in improving existing goods or in coming up with new ones. These ideas could then be utilized in the production of new goods and services. Foreign direct investment can also increase the investing firm’s brand awareness in the host country which can also improve its sales prospects.
However, for companies, not all of the effects from globalization are beneficial. Globalization exposes firms to more competition both domestically and abroad. This environment helps to keep prices low and forces companies to increase efficiency of production, lower costs, or alter their products to the changing needs in the market in order to remain competitive. Firms that can adapt to changing needs of consumers and those that have an advantage in technology, productive
efficiency, or information over their competitors are more likely to gain market share. This competition is what drives markets to an efficient allocation of resources and it’s the “invisible hand” that Adam Smith referred to in his book, The Wealth of Nations. The competition exists not just between large multinationals, but also includes smaller firms abroad that can compete globally because of advances in technology and communication.
Another global challenge facing firms, especially those with operations in more than one country, is how to integrate different operations and workforces so that they can work together efficiently. Culture differences and different attitudes toward work can make this difficult to accomplish. Differences in language and usage of language can also hinder efficiency.
One more problem facing firms operating globally is the increased risk of operating in a new foreign market. Firms can harm their brand if their foreign operations are unsuccessful. Foreign operations are harder to control than operations in the home country. Disasters, public relations problems, and political instability in the foreign country that the firm invests in present major challenges for the firm. One glaring example is the Union Carbide disaster in Bophal, India. The company was forced to pay 470 million dollars in damages to victims and their families in the aftermath of a methyl isocyanate gas leak from its chemical plant killed nearly 4 thousand people. Eventually the company was taken over by Dow Chemical inc. in 1999. Foreign
operations put firms at risk and could harm profits seriously or even lead to bankruptcy for the investing company when things go wrong. Effects on workers:
For workers, globalization brings a number of benefits. First of all, the increased activity from globalization creates more job opportunities. In developing countries, the increased work makes use of cheaper resources in the production of goods and services, such as a factory producing clothing garments in Indonesia, or a customer call center in the Philippines. In developed countries, increased work opportunities can arise for specialists in services such as consulting, helping large organizations adapt to the global marketplace, specialists in technology who can help the firms adopt and utilize the latest technology in order to stay competitive or gain an advantage over rivals, and specialists in foreign markets to assist firms in establishing their global presence and formulate local strategy.
Another benefit for workers involved in global trade is higher pay. According to Slaughter （2014），workers in American firms that are involved in exporting to other countries earn roughly fifteen percent more than workers who are employed in companies that only operate domestically. The pay for workers in multinational corporations is even more than that. This higher pay reflects the specialized knowledge of foreign markets and the premium paid to such workers who have it. One more benefit for workers is that the increased competition in for labor will serve as motivation to update their skills
and training. The effort to gain more skills and ability can help the workers become more efficient in the jobs that they perform and can help them to advance their careers. This can result in increased job satisfaction because of increased responsibility and higher wages as skilled and knowledgeable workers move up along the corporate ladder. For the workers that can upgrade their skills and knowledge, working opportunities will be plentiful.
On the other hand, workers do face a number of difficulties because of globalization. First of all, although globalization increases work opportunities, it creates more competition for the jobs that are available. The competition can come from locals or immigrants. Workers who don’t have the needed skills are likely to be made structurally unemployed. Also, an increasing pool of labor can put downward pressure on wages, especially for unskilled labor. Some immigrant workers are willing to work for lower pay than locals. Immigrant workers might also be more productive workers than the locals, which can make it harder for locals to gain employment. Another drawback from globalization is that workers who do have jobs will find themselves having to do more with less. As companies look to cut costs and improve efficiency, firms will pressure operational divisions to do the same amount of work or more with fewer workers. This will likely lead to longer working ours as well as forcing workers stay late to complete tasks that can’t be completed during their normal working hours. Managing email correspondence is one such
task that has increased from changes in technology over the past 30 years.
Additionally, workers face more job uncertainty in the changing business environment. For the workers with jobs, there is less job security as companies adapt to new business realities. Operations can be shut down or relocated in response to high costs or new opportunities elsewhere. For many manufacturing jobs in the US, globalization has coincided with a decline in labor union membership. According to Griswald （2010），private sector union membership in the US fell from a peak of 36% in 1953-54 to below 8% in 2006. As US manufacturers faced foreign competition that didn’t utilize unionized labor, they found themselves at a cost disadvantage. Unionized labor wages are considerably higher than non-unionized wages. Though, unionized labor can have higher productivity than their non unionized counterparts, the efficiency gain is dwarfed by the higher costs of unionized labor. If the cost discrepancy is too large, unionized labor can find itself priced out of work and those jobs would likely be eliminated by the firm or moved offshore. MWPVL International, a supply chain and logistics consulting site, explains that many grocery retailers in the US have outsourced distribution to third party logistic providers as a way of eliminating the high labor expense associated unionized workers in those operations. This is in response to competitive pressure from Wal-Mart, the biggest grocery retailer in the US and a company that uses non-unionized labor in its distribution operations. Expensive unionized labor makes it difficult to compete on
price with Wal-Mart because of its lower operational costs.
The last difficulty facing workers in the face of global competition is the necessity of relocation. Workers may need to relocate to where they are needed by their employers either in another part of their home countries or abroad. However, for certain occupations, technology may allow the workers to work from anywhere without having to relocate. On the other hand, work that can’t be done via telecommuting or using some other communication technology, relocation or change of jobs may be necessary. The global market for labor is not nearly as open as the global market for products. As Ghemwwat （2011）points out, the ratio of first generation immigrants to total world population is at the same level as in 1910, at 3%. However, with the aging populations in many developed societies, such as Japan, Italy, and Germany, there is likely to be an increase in labor flows from countries with surpluses of labor to countries experiencing shortages of labor.
Finally, some suggestions will be offered on how to thrive as globalization become more prevalent.
Responses to the global marketplace: How to stay competitive For workers, it’s important to specialize in their fields and stay up-to date on what developments that occur. Industries are likely up-to undergo more change as globalization reaches further pars of the world. It is also important for workers to seek out qualifications in
their fields. Becoming competent in utilizing current technology and considering how to use the technology in innovative ways can give the worker an advantage over the competition. It is also becoming more important to learn about other cultures and learn at least 1 foreign language. This will boost the worker’s cultural knowledge and expose the workers new approaches and new ways of thinking. For non-native speakers of English, they should focus on becoming more fluent in English because it’s the Linga franca for business around the world. For native speakers of English, it’s important to learn the most common language of the country, or countries where you expect working opportunities to be. It is worthwhile to consider becoming an entrepreneur. It’s much easier now for small businesses to compete in the global marketplace by selling not only goods, but also services. Technology makes it possible to bridge great distances cheaply and instantaneously. Finally, workers should be willing to relocate where the jobs matching the worker’s skill set are available. This flexibility to relocate will result in more abundant work opportunities for workers than for those who limit themselves to one location or area.
For companies, it’s important to streamline operations and rethink procedures in order to cut costs and speed up decision making. Changing market conditions require that firms react quickly to new developments. Smaller more specialized firms have an advantage over larger, more bureaucratic organizations, who are slower to react to changing market conditions. Companies need to be able to identify new opportunities and risks and act on that information quickly. It’s
not enough just to be able to produce high quality goods and services. Companies need to be skilled at managing change and identifying opportunities. Reeves and Deimler（2011）explain that IKEA, a furniture retailer, entered real estate in Russia when it opened new stores there. The company was able to identify and profit from increased property values surrounding new stores that it had opened up in shopping malls in that country. The resulting entry into Russian shopping malls netted more profit than its retail operations in that country.
Governments should create an environment the facilitates trade and encourages foreign investment while carefully considering the environmental impact of industries are increasingly important to compete in the global marketplace. Governments need to ensure that development is sustainable and doesn’t impose any negative externality on 3rd parties, such as pollution or environmental destruction. Management of natural resources will become increasingly important as population growth and development place increasing strains on the environment. Governments also should provided incentives to encourage their citizens to further training and education in order to create a more productive workforce. High quality human capital is one of the drivers of productivity, which can result economic growth.
Governments play an important role in setting rules and regulations by which companies operating in their markets must abide. Recently
however, US president elect Donald Trump has received a lot of publicity, much of it negative, in the news for his purported actions that would help to “make America great again” by “saving” manufacturing jobs in the US, which were being offshored. One well publicized case was that of United Technology Corporation’s （UT） Carrier plants in the state of Indiana. The company was persuaded by its biggest customer, whose purchases amount to around 6.7 million dollars, to accept an offer 7 million dollars in tax breaks over ten years to offset a savings of 65 million dollars by relocating production to Mexico, according to Sherman （2016）．
There are a number of problems with this approach to rectifying the loss of US manufacturing jobs. First, this action forces the company UT to miss out on an opportunity to reduce operating costs, which puts it at a competitive disadvantage with other foreign firms. In the future the company could lose market share both in the US and abroad. Moreover, reversing this relocation of production will save only .008 percent of total US manufacturing jobs, which were roughly 12.3 million in 2016, according to Paralapiano and Lai（2016）．This action is will not have much effect on total manufacturing jobs in the US as it represents such a small proportion of total manufacturing jobs. Third, pressure by the US government on US companies not to set up factories in Mexico could lead to retaliation by one of the US’s most important trading partners, Mexico. This could affect other US firms operating in Mexico not only as sellers but also as producers. After joining the North American Free Trade Agreement （NAFTA）
in January 1994, US exports to Mexico increased by more than 400%, from 1993 to 2013, according to Villarrel & Ferguson （2015）．Many in the US criticize the agreement claiming that it has lead to a loss of jobs. While it is true that there are approximately 15,000 net jobs lost as a result of trading within NAFTA, the US economy has gained roughly $450,000 in higher productivity and lower prices, according to Haufbauer, Cimino, and Moran （May 2014）．This piecemeal approach to reducing unemployment will not only be ineffective in dealing with the causes of job loss in the manufacturing sector, but also harm US domestic firms’ competitiveness and the economy at large by missing out on the benefits gained from unencumbered free trade within NAFTA.
In conclusion, this paper has explained what globalization is and some forces driving this trend. Next, this paper explored how globalization affects economies, companies, and workers in both positive and negative ways. Finally, this paper indicated how workers, governments and workers can respond to the challenges and opportunities that arise from increased global trade. How all parties involved react to the changing situations brought about from globalization will have a direct impact on their future prospects.
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