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Effects of Globalization in Economy and Unemployment

Nevertheless, globalization has also been linked to rising unemployment. This paradox is due to the fact that both workers and producers everywhere in the world are forced to compete in "globally integrated markets," forcing workers in developed countries where labor costs are higher to compete with workers in less developed and emerging nations where labor is cheap (Wagner 166). Wagner (167) points out that countries that have "avoided the increase in wage inequality have typically experienced rising unemployment rates, particularly among the unskilled." Slaughter and Swagel (78) assert that globalization's "increased capital mobility and foreign direct investment has had only a modest effect on wages;" instead, it has been the advances in technology that have affected the labor market by favoring skilled workers over less-skilled workers." Thus, on a global scale, globalization reduces poverty and improves economies, but it does so primarily in skilled workforces, leaving the poor still economically disenfranchised.

On the other hand, globalization does open up new entrepreneurial opportunities that-while they are easier for the skilled and financially well off to take advantage of-are open to anyone anywhere. Thus, three handweavers in Sub-Saharan Africa who have access to a computer and can learn to use it can market their rugs on the Internet and compete with rug companies in the developed world that charge a higher price for a commercially manufactured product that lacks the craftsmanship of handweaving. If the three handweavers succeed, they can add more handweavers to their number and eventually compete successfully with the rug giant, who must now worry about how it can lower its labor costs to be able to sell its rugs at a similar price to those being made in the Third World.

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Effects of Globalization in Economy and Unemployment. (2009, October 07). In LotsofEssays.com. Retrieved 14:28, October 31, 2014, from http://www.collegetermpapers.com/viewpaper/1303636378.html
 
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