Globalization is one of the most controversial topics in today's world. Globalization raises fears and apprehensions and the most prominent one that stands out is the growing power of multinational firms that bestows them with the right to retract jobs whenever and wherever they want. Globalization is regarded as one of the main causes of the increasing level of unemployment in Europe and in some other developed countries. In the 1990's, though the economists have depicted that only a small part of unemployment was due to globalization, the general population has not been able to gauge what the real reason could be. Globalization can also be described as the increase in the opportunity for business activities. Firstly, it depicts high growth in international trade (mainly goods and services but capital flows towards quite a few countries encourages foreign investments). Secondly it shows acceleration in information circulation and in technological progress.
[...] The destabilizing effects of globalization on the notion of employment 3 main destabilizing effects. The need for flexibility Globalization is a process impossible to stop, one needs to adapt to this phenomenon and adapt to a more and more global environment, especially about employment environment. Trying to escape globalization may lead to a lack of technology relatively to other countries because firms do not have the same need of technological progress to remain competitive if the state protects them to resist globalization. [...]
[...] Nevertheless trade is not the only factor determining this lack of convergence (cf. Solow model and its limits). Conclusion It is true that globalization has created some unemployment in developed countries but it has had a rather small effect and does not explain much of the European unemployment today. There has also been a change in the notions of employment and job. There are both positive and negative aspects of globalization, the positive side being the creation of jobs through trade, the negative one being inequalities and the problems linked to adaptation. [...]
[...] It is the same with capital flows towards third world countries : 90% of capital flows invested abroad go from one industrialized country to another. Even though a growing share of trade involves developing countries today)), developed countries are still leading the world economy and remain attractive. Some factors tend to compensate the unemployment created through delocalizations and globalization The first factor limiting the damages to developed economies is that by trading with developing countries and delocalizing production units, firms raise wealth among these countries and give workers higher buying power. That's the way trade liberalization contributes to development. [...]
[...] They will have to import them from developed countries. So from developed countries' point of view, there will be more exports of sophisticated products. Therefore, creating wealth is worthy for developing countries because it raises the size of the potential market. In France one fourth of the workers are dependant upon exports, it is much higher than the proportion of people who lost their jobs because of delocalizations. Furthermore, industrialized countries trade mainly with each other of French flows take place with another developed country) and these trade flows involve manufactured goods; that means the products developed countries export in direction to developing countries have a high added value whereas western firms delocalize mostly low qualified jobs of labor- intensive industries. [...]
[...] The effect is concerned mainly some sectors that entirely disappeared or suffered greatly because of too high labor costs. For example, the shoe industry in France Another idea against the thesis that globalization raises greatly unemployment is easy to understand when one looks at the US economy, the most globalized economy in the world. Most multinational firms have been first American firms, that consider their potential market is the entire world or at least most of it. Globalization is there not as controversial as in Europe. [...]
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