The notion that globalisation can be bad for

By mention to an Employment sector, see the impression that globalization is bad for you.


The impression that globalization can be bad for you has been combative for over two centuries. There are two schools of idea on the effects of globalization. The first school of idea holds that globalization is good since it allows for competition between houses the universe over. Competition leads to houses happening more advanced and efficient ways of bring forthing goods and services and therefore consumers enjoy better merchandises. Globalization has expanded the market for most companies, which has improved the universe economic system by making employment and hence a power to purchase. It has besides led to cheaper goods as companies have found cheaper states where they can bring forth the same or even better quality goods than in the developed states to which they were antecedently confined. It is on this last advantage that the 2nd school of idea opposes globalization. The ability of today’s planetary administration to establish their production in any state has eroded the occupation security of workers in the developed states where the trade brotherhoods are a force to think with and the authoritiess have taken steps to safeguard the rights of the employees. By companies relocating to poorer developing states where the labor market is non closely regulated by the authorities and the trade brotherhoods are weak, they deprive the workers in the developed states of their support, depress rewards in the richer states or gnaw the power of the trade brotherhoods to negociate for better footings. A 2nd resistance to globalization is that the markets to which these companies relocate, some with GDPs ( Gross Domestic Products ) that are lower than the one-year turnovers of the corporations ; the on the job conditions are shocking and workers are by and large exploited.

The electronic industry

This paper examines the thought that globalization is bad for you with a peculiar mention to the electronics employment sector. The electronics industry has developed quickly in the last 50 old ages with of import innovations in the latter portion of the 20Thursdaycentury. The innovation of the micro chip by Intel in 1970 changed the rate at which the industry grew. By replacing the thermionic valve, the micro chip increased the velocity at which bids could be relayed and processed by computing machines and hence all other equipment that contained computing machines. The miniaturization possible with micro chips besides meant that more electrical equipment could be fitted with a computing machine. The research and design was ab initio carried out in the United States of America and the assembly of micro chips was done within the state. Intel has now developed into a 91,000 strong employer in 48 states ( Intel, 2006 ) . Intel is hence a planetary administration using people in different states to transport out the different undertakings involved in the production of the micro chip. A micro chip is produced in two distinguishable stages, the first stage is the research and design phase and the 2nd stage is the assembly stage. The research stage is capital and cognition intensive, whereas the assembly is labour intensive and requires small accomplishment. This has given Intel the chance to transport out design in the USA and industry in South East Asia.

The forces of globalization brought Intel face to face with other planetary micro chip makers such as Toshiba from Japan and Samsung from South Korea. The resulting ferocious competition between these companies fuels invention and a thrust to maximize net incomes. The net income nonsubjective requires that companies cut down their costs while increasing their grosss. Electronicss companies have, over the old ages, relocated to states with cheaper labor costs. This has led to an call in the developed states that the occupations are being lost to the developing states. This fright has been farther fuelled by populist politicians such as Ross Perot ( USA Presidential aspirant in 1993 ) who stated that the North American Free Trade Agreement ( NAFTA ) would be characterised by a ‘giant suction sound’ as American ( USA ) occupations moved to Mexico ( Business Week, 2005 ) .

Effectss and tendencies of globalization

As planetary administrations seek to cut down their costs by using cheaper and abundant labor in the developing states they close down workss in the developed states mentioning inflexible labor markets and high pay rates. This state of affairs can be illustrated by the closing of Samsung works in Teesside, UK where 425 occupations were lost in January 2004. Samsung said that they had decided to relocate to cheaper labor markets in China and Eastern Europe where employees worked for every bit small as 50p in China and ?1 in Slovakia compared to the ?5.70 in the United Kingdom ( The Guardian, Jan 16Thursday2004 ) . In this case, the occupations lost in the UK were low-skill and blue-collar in nature.

The migration of employment chances in the electronics sector has occurred in two stages with different effects on the employee. The initial phase was characterized by the resettlement of low-skill and insistent work, which required small or no formal accomplishments from the technologically advanced states to the developing states. This initial moving ridge saw the assembly of goods designed in the developed states transferred to the developing states. Administrations kind to cut down the costs of production significantly by using cheaper labor in the poorer states. Japan contracted workers in Taiwan, South Korea and Singapore to fabricate their electronic goods. Under an agreement known as ODM ( Original Design Manufacturing ) , goods designed in states such as Japan, Germany and the USA so transferred to South East Asia and Eastern Europe for assembly. The initial phase resulted in an international division of labor that reflected the comparative differences in the accomplishment degrees between the developed states and the poorer underdeveloped states. The developed states had better instruction, large research and design budgets and hence cognition for the skill-intensive stage of the production of electronics.

The loss of employment in the richer states was disproportionately in the low skill employment sector. On the other manus, the cognition based and skilled employment increased as the developed states became more efficient and productive. The developed states besides had better commercial systems supported by well-developed legal systems. This meant that while corporations preferred to fabricate in the poorer states they recognized the demand for a commercial systems and the stimulation of the competition of other administrations. The protection of rational belongings and clear legal resort to breach of contract meant that big decentralized administrations still had their central offices in the developed states.

The initial stage of the division of labor through the export of production procedures to the developing states set the phase for the following stage. While once the employment chances that migrated were low-skill, today white neckband occupations have besides began migrating. States that received foreign investing in the first stage of globalization have now developed accomplishments such that design and production of goods is done within the state. While some of the fabrication may happen within these states, they excessively have started exporting labour intensive occupations to new entrants into the planetary economic system such as India and China. Taiwan, a former developing state that attracted investing from Japan, South America and the USA for the production of white electronic goods has now started bring forthing its ain trade names such as BenQ, which produces electronics and nomadic phones. These companies in Taiwan now export their fabrication occupations to China and India. The states that once acted as the fabrication Centres for the richer developed states are now their rivals and are seeking to put in the development states. ( The Economist, 2005 )

In the 2nd stage, the once developing states have created a strong white-collar sectors that can besides offer concern services this has attracted more multi-national administrations from the developed states to the developing states. The ground for this is that multi-national administrations that have migrated from the developed states to the poorer states brought with them technological cognition. They besides increased the incomes in the receiver developing states so that instruction and preparation chances increased. This in bend created a skill base in the development states that could offer the same services to the international market at a cheaper monetary value.

The growing of the scheduling sector in India bears witness to this fact. The Indian population is good educated, as instruction is a nucleus value in the Indian civilization, and they speak English. This coupled with the fact that scheduling is an easy movable accomplishment has turned India into a fastness of package programming. Returning computing machine coders educated in the developed states have besides turned India into formidable competition for the Silicon Valley in the USA, with Bangalore claiming the name ‘The Indian Silicon Valley’ . The migration of white-collar occupations from the developed states to the developing states has besides had an consequence on the international division of labor. In the old stage, the division of labor meant that low-skill labor-intensive work was done in the development states while skilled and knowledge-based work remained in the developed states. Now, thanks to the powerful broadband communicating links, client services and concern support services can besides be offered from anyplace in the universe.

The new face of globalization is marked by the developed states concentrating on more service-based occupations, some that are extremely specialised and require considerable accomplishment and others that can non be outsourced for illustration the sale of beefburgers. The developed states are ‘de-industrialising’ as they relocate their workss to developing states. The loss of companies such as Dyson from the UK to Malaysia or the closing of the Samsung electronics works in the UK to China and East European economic systems are marks of de-industrialisation. Harmonizing to the EEF, a manufacturers’ administration in the UK, a study carried out on 494 members showed that 42 % had outsourced the industry of parts or whole of their merchandises. ( EEF,Dec 2004 )

Another phenomenon that has resulted from globalization is the increased in-migration from the poorer developing states to the richer developed states. The immigrants are by and large either without the necessity accomplishments to lend to the extremely skilled employment sector in the developed states to which they migrate or do non hold the same rights to employment as the citizens of the developed states. The immigrants therefore compete with the low-skill workers in the rich states either dejecting rewards or increasing unemployment degrees. In the states where the authorities has a stiff pay system, protecting the minimal pay additions unemployment as employers relocate and refuse to take on more employees. In states where the lower limit rewards are non protected, the employers lower the pay rate in line with demand for the employment.

The alterations in the international division of labor have had a distinguishable consequence on incomes. In the rich developed states, the rewards to the extremely skilled workers have increased well while the rewards to the unskilled and low-skill workers has reduced or there is increased unemployment. The two effects have increased the disparity in income degrees in the richer states. The income in the poorer developing states has increased well as these states have joined the planetary labor force. Production in these states has led to economic growing and therefore an addition in the mean income degrees in the development states. However, in recent old ages the same income disparity witnessed in the rich states can now be observed in the poorer states as development favours the skilled over the unskilled. ( Krugman and Obstfeld, 2002, pg 78 )

The impression that globalization can be bad may be substantiated by the continued loss of industry in the developed states and the resettlement of traditional middle-class white-collar occupations every bit good as the anterior loss of blue-collar occupations to the developing states. The influx of immigrants as they seek better life conditions is seting force per unit area on available societal constructions. The disparity in incomes in the developed states between those who are unemployed or whose rewards are depressed due to the outsourcing of work to the developing states and the well-paid cognition based employees is besides a negative consequence of globalization.

However, the advantages of rapid globalization are besides clear ; cheaper goods due to cut down costs of production and the enlargement of international markets raise returns to the proprietors of capital based in the developed states. Increased productiveness in the developed states is besides a long-run benefit of globalization. The falling monetary value of many electronic goods is attributable to the spread outing planetary market. The entry of the China and India as fabrication human dynamos has reduced the costs of production and therefore end-user monetary values. Incomes and therefore criterions of life are lifting around the universe as more of the capital-owners from developed states invest in the development states.

In decision, as illustrated by the electronics industry, globalization has had good and bad effects on the person. The negative effects of globalization on the single demand direction by the authorities and other establishments. Blue and white-collar employees who find that their employers have relocated to other states need better preparation and grownup instruction to enable them to accommodate to the new economic demands. Globalisation like mechanization may look to take away occupations from people in the developed states, but new occupations can be created.


Devils, Peter ( 2003 ) ,Global Shift, Reshaping the Global Economic Map in the 21stCentury4ThursdayEdition – Guildford Publishers, New York USA

Gennard J & A ; Graham J ( 2005 ) ,Employee Relationss4ThursdayEdition CIPD – London, United Kingdom

Krugman and Obstfeld ( 2003 ) ,International Economics – Theory and Policy6th Edition, Addison Wesley – USA

Mabey et Al ( 2004 ) ,Human Resource Management, A Strategic Introduction2neodymiumEdition, Blackwell Publishing United Kingdom

The Economist ( 13ThursdayJan 2005 ) ,Traveling on, the Economist Newspaper Limited, London –UK

EEF ( 2004 )Where Now for Manufacturing, retrieved on 27ThursdayJuly 2006 from

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The Guardian ( 16ThursdayJanuary 2004 ) ,Fury over closing of Samsung of mill, Guardian Newspapers

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