Globalization- The Upcoming Downfall?

By definition, globalization is is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture. It is the process in which the many countries of the world are being united by- as well as destroyed. Globalization may just be the downfall of the economy within the Western world. A monumental connection was formed in the 1980's between many countries of the world, and this created a close business in trade of goods, services, money, technology and information. This newfound marvel easily caught the attention of economists everywhere, and they continue to this day to rave about its unbelievable usefulness. What they are ignoring, it seems, are the many negative affects that globalization is having on the world's economy. Globalization negatively affects the world economy because it creates many income, employment and inequality issues, as well as brings economies too close in both developed and still-developing countries. These issues can be examined through both developed and still-developing countries' employment and income gaps, as well as the domino effect a financial crisis in one country will have on its neighbors.
At the starting point, most who were highly in favour of globalization were those located in developed countries. They were convinced that this sensation would destroy class divide due to a massive amount of job opportunities that just weren't present before. Though these job opportunities were, in fact, present, they weren't the beautiful dream everyone thought they would be. The new jobs that were created were those that were skill-oriented, meaning the wages of non-educated workers had to be cut. According to the Economic Policy Institute in 2011, studies have found that there are less job opportunities for non-college educated people, because most of the labour intensive jobs have been outsourced to developing countries because they can pay less for manufacturing and make a larger profit (EPI, 2013). Globalization largely concentrates on its need for educated workers, creating an even larger gap between the rich and the poor. This is especially prevalent in the United States, as EPI Research and Policy Director Josh Bivens found. In 2011, he stated that the “international trade depressed wages for non-college educated workers by 5.5 percent, costing the average worker $1,800," (EPI, 2013). Though it may initially seem like a brilliant idea to relocate jobs elsewhere for a faster and quicker profit, many workers located in the West are losing money. The concept of 'outsourcing' these jobs in the United States hurts the economies of not only them, but many other Western nation economies as globalization has brought all so close together. The composition of labour has also been greatly affected as jobs are now divided into two main categories; productive and overhead. Many enterprises have a lot more disposable money, causing them to tend to employ more overhead jobs and outsource the productive sector (Hoefle, 2009). To the companies, this idea seems favourable but is not to the average Western worker. Doing this, these companies diminish the assortment of employment available, especially to those lacking a degree or diploma. Workers in developed nations do not seem to gain much regarding the employment that globalization has to offer, making it a dangerous gamble for them to throw themselves into.

Contrary to the thoughts of those in support of international globalization, developing countries are receiving little to no benefit in regards to better employment. Globalization complicates the equality within the developing nations. The world is moving towards the glory of free trade and sharing information, causing many of the developing nations to encounter difficulty in keeping up with this new form of economics. This creates a void in trade because many of the developed countries are highly centered on the concept of high-skill industries, something in which developing countries do not have the money for (Pologeorgis, 2012). This makes it hard to compete with them, and the developing countries begin to fall even further behind. The university professor, Dr. Nicolas Pologeorgis, stated in 2012 that “although free trade increases opportunities for international trade, it also increases the risk of failure for smaller companies that cannot compete globally," (Pologeorgis, 2012). What he means by this is that the idea of a highly globalized world is a bad one as it creates a large trade gap between developing countries and developed countries because their weak economy just can't compete. The blame for this gap can be explained by the fact that developing countries just don't have the resources they would need to even be a contender against the developed countries in a digital age such as this. Only countries such as Canada or the United States were strong enough economically to have a go at taking on new technology, whereas the developing countries were essentially left in their dust. The developing world was still having enough difficulty simply trying to stabilize their economy in the late 20th century, there was no way they could possibly take on a task as extreme as a technological advancement. The United Nations University World Institute for Development Economics researcher, Deepak Nayyar, discovered in 2009 that “[t]he ratio of GDP per capita in the 20 richest countries to GDP per capita in the 20 poorest countries of the world rose from 54:1 during 1960–62 to 121:1 during 2000–02,” (Nayyar, 35). This only builds even more overwhelming proof that an income gap is being forged between developed and developing nations because of globalization.

Finally, globalization is causing individual countries to become too vulnerable to an economical downfall due to their dependence on one another. The economies of countries that once had separate and unique belief systems are now being coerced together, meaning the currency between them must now span larger and faces an even bigger chance to collapse. On top of this increased risk, a financial crash between such a large expanse of different countries would cause a global economic crisis. This is already evident through the massive amounts of economic failure we see written in the news on an almost constant basis between countries sharing the same currency. Support for this idea comes from Joseph M. Grieco of Duke University, as he states “the financial crisis contagion in 1994-1995, when the Mexican peso collapsed, was followed by reductions in external capital flows to a number of Latin American countries, for example, Argentina's GDP contracted by 5 percent during 1995,” (Grieco, 2000). His statement indicates that the closeness progressing between countries meant to be separate is rising to such a dangerous level that a domino effect in ones' downfall would cause an international catastrophe. This perception is relatively new and foreign to the minds of economists because this is the first time in history that nations have been so close in an economic way. Issues with employment is also provoked within countries because of the impact of trade and how much everyone now depends on one another. Grieco also found that “Argentina’s unemployment in the wake of the Mexican financial crisis increased from about 11% in 1994 to almost 18% in 1995 and 1996,” showing the reliance separate countries now have on eachother (Grieco, 2000). Altogether, this is proof that globalization is bringing economies too closely dependent on one another and causing them to be in a more vulnerable place. The countries become more susceptible to an economic collapse, and both their employment and currency would suffer because of globalization.

In conclusion, the concept of globalization quite obviously has more negative aspects than positive within itself, causing one to question why economists so strongly promote the idea. Globalization complicates income and employment in both developed and developing nations, as well as making countries more vulnerable than ever seen before in history. The danger that world globalization puts the Western world in begs the question; will this be how it all falls once more, and how soon?

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