Essay03: Globalization- Pros & Cons
Globalization has had a profound impact in reshaping the world. A plenitude of third world economies have benefited from its merits. Nonetheless, the cons of globalization should not go unnoticed, especially the way it contributes to unemployment in the first world countries.
The labor force in third world countries, like India and China, operate in low income rates. This makes them a viable choice when major multinational corporations look for outsourcing certain business processes of their trade. As a result, they not only benefit from a foreign influx of funds but experience a rapid rise in employment opportunities in their poverty stricken economies. There is no denying that globalization has a positive impact to these developing nations.
However, when certain companies go offshore in search of affordable labor that helps contain operational costs at a tolerable level, the companies’ country of origin may suffer severely. For instance, since majority of the United States’ information technology businesses have been outsourced to the likes of India, the firms have been reluctant to take on employees in their countries of origin. Moreover, there have also been instances of rampant job cuts in the mainland because of the high operating costs — a big chunk of which is attributable to employee remunerations. Another such example is the struggling automotive industry in the United States. Lesser economies like Malaysia, India and Japan, have been able to manufacture automobiles at a fraction of the cost compared to their American counterparts. Since the American automotive industry couldn’t produce at a lesser cost, the tough economic conditions from 2008 onward proved to be extremely challenging. The US Government had to intervene and issue bailout packages for the likes of stalwarts such as General Motors. It is also speculated that globalization is the primary reason behind the States’ high unemployment rate of 10%.
Like everything else, globalization has its positives and negatives. In spite of its demerits, globalization is an important cog in the wheel of the open economy and democratic society. If not for it, cross border relationships between different countries would not have existed so prominently and fueled development in the participating nations.