Globalization changing the terms of the world economy

By Ryan Amante

You get the error message of death on your computer. Angrily, you dial the customer service number of the computer company. In no time at all, you're speaking with someone in India who speaks perfect (if accented) English.

So why are you sitting here in Santa Clara speaking to someone half way across the world? It's all thanks to globalization.

Globalization is one of the most hotly contested economic issues to date. It's the "Made in China" sticker on the bottom of your computer speakers, the "Made in Indonesia" tag on your soccer cleats and the Dell call centers in India and the Philippines.

Globalization is the driving force behind the products and services we use on a daily basis.

Allow me to illustrate a more local scenario for you. You're in the library. You sit down in a wooden chair, which is probably Italian-made, and open up your laptop. Your LCD screen came from Vietnam, your computer body from Malaysia and your modem from Singapore. The only locally produced part of your computer is the microprocessor, which came from Silicon Valley.

Globalization means that today's capital is employing labor in the most economically efficient places. Technological innovations and the dissolution of trade barriers are working together to expand the world's overall wealth. That's a good thing, right?

Well, maybe not. Think about what happens to the jobs that get outsourced. Our workers here in America lose those jobs, and since it's mainly relatively unskilled positions that are being sent away, unemployment goes up.

Since the unskilled jobs are the first to go, outsourcing leads to a widening gap between the wealthy and the poor. This widening gap leads to less spending, and less spending affects employment. In plain English, unemployment pushes our economy toward a recession.

However, there are benefits to globalization as well.

The United States is tapping resources such as land, labor and capital that have never been fully utilized before. Most importantly, we're pursuing our entrepreneurial abilities to a fuller extent.

The U.S. no longer has to look for labor among its own citizens -- it can now find it in foreign countries, thus creating the dual benefit of cheaper labor for the U.S., and a bigger job market for foreign countries.

Why do I suggest that entrepreneurial ability is the most important factor?

Entrepreneurial ability encompasses innovation and ambition. Now, modern innovators are not limited to the resources of their home country. Their ideas can be shared and fostered with others all over the globe.

Developing countries are receiving massive influxes of investments from the developed world, namely America, Japan and Germany. Therefore, companies from countries like these get to produce their goods for a decreased price, while creating jobs in the country they're investing in.

This increases real income in both places by lowering prices in the developed nations and providing new sources of income in the developing world.

Critics of globalization suggest that it is harmful primarily because it exploits domestic workers and diminishes the clear lines of cultural identity as the barriers between nations fall.

Though these issues are real, consider this: Throughout history, mankind has always banded together in communities and conglomerates. These communities slowly evolved from clans of hunter-gatherers to villages, cities and eventually nations. Thanks to globalization, these nations are becoming connected economically and culturally like never before.

Regardless of whether globalization is good or bad, it has now become impossible to stop. The only thing left to do is embrace it and accept the change.

Ryan Amante is a sophomore marketing major.