Advantages of globalization
Since globalization gained momentum in the last half of the twentieth century, it has created significant opportunities and posed enormous challenges to development in most countries. According to Samimi and Jenatabadi (2014), globalization involves the flow of services, goods, and capital between various countries and continents. Continued economic integration has generated enormous controversy regarding the correlation between globalization and economic growth. Proponents have argued that increased globalization is suitable for a country because it enhances the allocation of resource, augments capital and improve productivity, and leads to transfer of technology. Conversely, globalization is detrimental to developing countries and unskilled workers. These two competing perspectives were tested during the 2008 financial crisis. The economic downturn exposed the adverse effects of globalization of workers as across America lost their jobs when firms relocated abroad in search of cheap labor. The low-skilled workers who retained their jobs saw a 21% decrease in their income (Drahokoupil & Fabo, 2017). Moreover, increased globalization has also lead to an increase in black markets, which export the financial crime and illegal arms across continents. Therefore, America needs to develop policies that embrace the advantages of globalization, while, at the same time guarding against detriments.
Analysis of the Issue
Offshoring has drastically altered the labor markets. As Barbe and Riker (2018) underscore, offshoring occurs when a company relocates part of its production to other countries where the cost of labor is low. Globalization has significantly affected the manufacturing sector. In 1980, the manufacturing sector in America employed approximately 20 million people, but, in 2017, that number had reduced to 12 million (Barbe & Riker, 2018). The Heckscher-Ohlin model explains this declines by theorizing that companies often move parts of their production processes that rely on unskilled labor to the emerging countries to cut costs (Forte & Ribeiro, 2020). This rise in offshoring has resulted in a loss of income and high unemployment among the unskilled and semi-skilled workers. Employees who lose their jobs often take more than five years to find substantial employment (Drahokoupil & Fabo, 2017). In this regard, offshoring negatively impacts the quality of employment across America, causing stress as employees work in less satisfying with fewer advancement opportunities.
Moreover, globalization has led to the rapid development of new technologies, which continue to shape the labor markets. It is estimated that from 2000 to 2010, up to 6 million jobs in America have been lost due to competition from foreign companies and technological advancement (Forte & Ribeiro, 2020). The global competition is increasing the need for efficiency, which has led to increased automation. Software and robots will shape the future of the labor markets. Even though this globalized competition is improving efficiency and innovation, automation is increasingly substituting employees. This trend is because machines can perform tasks with more precision and at lower costs compared to humans. As a result, wages for unskilled workers have continued to decline. Thus, without proper intervention, technological advancements may destroy more jobs than they are creating.
Furthermore, globalization has fuelled the global black market, particularly the international flow of drugs and financial crime. Carbanak attacks, which occurred in 2013, remains one of the biggest financial crime involving ATMs (Hasham, Joshi, & Mikkelsen, 2019). The malware led to a loss of more than $1 billion as the perpetrators illegally inflated their account balances and withdrew the cash (Hasham et al., 2019). The attack was blamed on the increased digitization and interconnection of the global financial system. Unless effective policies are instituted, more cyber-attacks are likely likely to occur in the global financial system, providing support for drugs and other crimes.
Globalization has drastically heightened the importation of illegal drugs into America. In 2016, Americans spent up to $150 billion on heroin, cocaine, methamphetamine, and cannabis (Midget and Kilmer, 2019). With increasing globalization, retail drug markets across continents have become more accessible. In this regard, there, the demand for illegal drugs has gradually risen. Illegal drugs have health and socioeconomic impacts, which not only strains the healthcare system but also increase crime levels in our communities. It follows that policies to curb the growing demand for illegal drugs must be adopted to reduce its socioeconomic effects .
Proposed Solutions
Globalization is a highly complex process, which has been the primary cause of conflicts and tensions across the world. As its impacts become pervasive, the government must conduct robust research and collect data that will inform its development policies in a globalized world. These policies will ensure that America remains competitive and attractive to both domestic and foreign investments. The first approach is to reform the education system to resolve current workplace challenges. Currently, the school system encourages students to learn individually, but as the world becomes interconnected, the need for collaboration will increase. In this regard, the assessment of students should recognize and award collaboration. This skill will help American students collaborate with their colleagues across the world to execute complex tasks and solve problems. Big data should be used to redesign our education system by encouraging institutions to adopt international best practices in teaching and increasing collaboration with other schools across the world. Shanghai, for instance, has created an open-source community for teachers to share their best practices and witnessed a drastic improvement in teaching and remuneration of teachers (Schleicher, 2018). The United States should also create an international platform for teachers to share their experiences and inform school policies. This globalized collaboration in teaching will ensure that students are thought skills that are relevant in the 21st century.
As the global competition increase, there is a need for the government to ban cheap imports or subject them to tariffs. Banning cheap imports will also spurn innovation, which may reduce the current trade deficits (Abboushi, 2010). This policy will protect jobs, particularly for low-skilled workers. If the United States is to become competitive globally, there is a need to empower workers. Cheap imports also hurt the local companies, which may be forced to provide discounts to compete effectively. In this regard, firms may be forced to end their operations or relocate to low-income countries. Thus, restricting cheap imports will reduce the effects of globalization on the workers.
Strategic Recommendations
The government needs to be proactive in guarding against the effects of globalization to protect and enhance America’s competitiveness in the world. One of the recommendation to achieving this competitiveness is education reform and continuous training. In this regard, the department of education should use big data to conduct continuous research on the international best teaching practices and mandate schools to adopt them. These practices should take into account future changes in the labor markets and ensure that students can effectively collaborate in a globalized economy. Funds should also be allocated to developing the innovation pipeline by encouraging and supporting STEM students from elementary and high schools. This measure will ensure that America will always have scientists who will help the country compete globally in the future. Thus, education reform guaranteed the competitiveness of American companies and workers.
Lastly, banning cheap imports or placing tariffs on them to protect will protect local industries from unfair competition. Emerging economies have a low cost of production while allows them to manufacture goods cheaply. When these products are imported to the United States, they cost less than the locally manufactured ones. Therefore, local industries may be forced to relocate or offer massive discounts, which reduces their competitiveness and profitability. Thus, restricting cheap imports will enhance the capacity of local manufacturing firms and protect low-skilled workers from unemployment due to widespread offshoring.
Weaknesses and Limitations
The rise in domestic prices is one significant weakness of this policy. A drastic rise in prices leads to inflation, which increases the cost of living for consumers and reduces their purchasing power (Öner, 2020). Inflation may lead to a prolonged period of economic instability, which may stifle growth. As a result, less affluent households may struggle to find employment and afford their basic needs. Thus, this policy cause may disadvantage more impoverished communities.
Cost-Benefit Analysis
This policy will enhance America’s competitiveness globally. Implementing educational reform enhances innovation and helps workers improve navigate the dynamic labor markets. As a result, they will quickly adapt to job losses due to automation of production processes. On the other hand, the government may need to raise taxes and decrease spending on other sectors to fund these reforms. Even though employees may celebrate the government’s attempts to protect the local manufacturing industry, the cost of goods and services will increase significantly. Overall, this policy is beneficial to the American economy since it encourages continuous research on suitable policies to guard against the negative impacts of globalization.