The state of globalization in the world has become more pronounced in this age and time due to changes in many factors such as improved technology, innovations, and transportation. It is a process that has made the world become a global village where different nationalities and cultures can easily converge. Recently, a lot of attention has been given to the term globalization because of various reasons chief among them being the economic impact it has on a country. In the US, questions have been asked on whether globalization acts as a threat or provides an opportunity to the country’s economy (Published).
Most firms in the US are known to engage in international trade where instead dealing with domestic trade they decide to purchase goods and services from overseas because of lower costs. This type of trading which is known as offshoring is an aspect of globalization which has the ability to affect workers in many sectors due to foreign competition for their jobs. It is estimated that between 2000 and 2003, the USD lost about 170,000 jobs to foreign workers. These numbers seem high but should be viewed in the context of the total number of job turn over that happens in America every year.
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Globalization is a process in which economic activity occurs both ways. Even though jobs can be lost to foreigners, jobs are also gained which boost economic activities in the country. For instance, America insources more office work than it outsources. This means that the country uses more of its workers than the services of foreign workers. Additionally, foreign companies make even greater use of workers from America. Estimates indicate that in 2003, the US bought about $80 billion worth of services from foreign workers. However, the value of services bought from US citizens by foreigners was much higher and stood at about $130 billion. Moreover, in 1991 through to 200, multinational companies based in America created over three million jobs overseas and about five and a half million jobs in the US which translated to an increase of about 30% in payrolls. This situation enabled a faster rate of growth in the job market as opposed to those created by domestic companies (Litan, 2000).
This statistic disapproves the assumption that a job that is created overseas cannot be replaced in the domestic market. According to the US commerce Department, the US gain jobs when foreign companies invest in the country the same way they lose jobs when local companies invest in other countries. In 2001, foreign companies employed about 7 million workers in the US which was an increase from 5 million in 1991. These included highly paid workers in the Auto industry with leading companies such as Mercedes-Benz and Honda. Other notable foreign companies operating in the US include Novartis of Switzerland, Toyota, and Samsung.
Globalization also creates opportunities in the America by helping economies of other foreign countries to become stronger. This is because growth in income levels in other countries creates a higher demand for goods and services that can be sourced from America. This state of affairs offers the US a chance to compete with other countries to offer such goods and services. However, such opportunities can be missed due to trade barriers created by bad policies. Globalization is also important in helping increase the productivity of the country which has a great impact on the US economy.
A good example is the production of Information Technology software where the offshoring of computer-based manufacturing leads to lower costs in telecommunication and computer. The reduced prices lead to the spread of IT in the whole of the US economy resulting in an increase in productivity and growth. The offshoring process has the ability to reduce the cost of IT software and encourage the spread of IT including the creation of new businesses that capitalize on cheap IT software. On the other hand it also creates new jobs to American workers in designing and executing IT packages for a wide range of industries and companies (Parry, 2004).
Offshoring, therefore, creates new opportunities throughout the US economy. The new jobs created are then able to replace lost jobs due to lower prices. The opportunities created by this type of globalization that allows for the creation of new jobs and the chance for workers to take up these jobs is a true reflection of a flexible and vibrant economy. This is the type of economy in which capital resources and labor move freely between industries and companies. It is this kind of flexibility that the US economy is well known for. It is through competition that change is induced. Globalization brings in the aspect of competition where countries and companies compete with each other for capital, trade, human resources, goods and services. It is therefore important for countries to have flexible capital and labor markets to be able to compete on a global scale.
Even though sometimes the issue of productivity affects many workers who lose their jobs, it is a good for the overall economy. This is because in the long-term it creates higher living standards covering the whole economy. The ability of an American worker to produce more goods and services in a given time duration has been the most important element in the US economic success story. Sectors such as manufacturing and agriculture produce more outputs with fewer laborers. This trend as also extended in the services sector in the US due to technological advancements which have taken over most jobs.
References
Litan, R. (2000). The “Globalization” Challenge: The U.S. Role in Shaping World Trade and Investment. Brookings. Retrieved from: https://www.brookings.edu/articles/theglobalization-challenge-the-u-s-role-in-shaping-world-trade-and-investment/
Parry, R. (2004). Globalization: Threat or Opportunity for the U.S. Economy? FRBSF Economic Letter. Retrieved from: https://www.frbsf.org/economic-research/publications/economic-letter/2004/may/globalization-threat-or-opportunity-for-the us-economy/
Ritzer, G. (2010). Globalization: A basic text . Malden, MA: Wiley-Blackwell.
