Introduction
Have you ever wondered how your t-shirt was made? In 2013, NPR followed the production of a T-Shirt, from the lab-made cotton seeds grown in the United States, to the material processed by giant machines in Indonesia, to the final stitching down in Colombia and Bangladesh. Throughout the process, shirts get shipped in giant boxes across the world. The freight rate for them to end up at your front door is higher than the combined cost of raw goods, global transportation, and printing fee.
This process isn’t just limited to clothing. Ford’s Lyman car is designed in Germany, the gears are made in Korea, the pump is produced in the United States, and the engine is built in Australia. The same is true for most modern products. Our world has become increasingly sophisticated in the ways goods are produced and consumed, to the point where your products may have traveled the world more than you have! Even with technological feats, how is this possible?
Explanation
The answer lies in the phenomenon of globalization. With a framework from the World Trade Organization (WTO), countries have implemented measures to reduce trade barriers. Barriers include extra taxes on foreign goods called tariffs, limiting the number of products a country imports or their quotas, and various domestic rules and regulations about manufacturing. By reducing barriers, economists believe we can increase investment. After all, more jobs and economic growth are possible when goods, money, and labor can freely cross borders. Countries make deals that eliminate barriers to trade. These deals, or free trade agreements, allow corporations to gain competitive advantages like reduced costs, access to more customers, and removal of tariffs. These benefits extend to consumers who have access to more products at lower prices. The increased communication technology helps businesses invest across borders.
Definition of Globalization
Globalization is the increased flow of technology, information, and products across borders. Economically, it encompasses the interdependence between countries produced by free trade agreements. Globalization also spreads Western ideas of political, economic, and cultural life.
Critiques
Globalization has many critics. For example, many dislike how it generates concentrated wealth and power in the corporate elite. It has allowed corporations like McDonald's, Starbucks, and Nike to thrive worldwide, causing a wider gap in income and education inequality by making the rich richer and the poor poorer. Workers are impacted by declining wages from cheaper production abroad, while technical expertise and experience are concentrated in developed countries.
Bangladesh illustrates the downside of economic growth in the garment industry, which employed around four million people in 2013. Working regulations in the garment industry pay the average worker less in a month than a US worker earns in a day. Unions may be unable to bargain with companies in areas with high unemployment. If you are the only one employed out of all your family and neighbors, no matter how low the pay, you have an incentive to keep the job. In essence, some critics blame globalization for the exploitation of workers in countries without labor protections.
While globalization can raise the global standard of living, making everyone seemingly "better off," it can be damaging to local economies and individuals. The economic growth attributed to globalization is not distributed evenly across all countries or industries. Specific industries such as the US textile industry or corn industry in Mexico have collapsed because of global competition. One response to this problem has been protectionism, which is when countries shield domestic industries. To do this, countries place subsidies, a specific form of financial assistance, to certain industries to support them from international competition. Wealthier countries can keep industries alive with subsidies, but this solution doesn’t work for less wealthy nations.
Applying It
Experts and activists agree that industry is necessary for people’s well-being and opportunity. However, with mixed impacts, globalization is simultaneously interpreted as a motivating factor in companies’ “race to the bottom” to have cheap production methods with minimal regulations and the “race to the top” to spread a higher baseline living standard. Globalization improves industries and revenues in some countries, but destroys culture in others. In an era where we have excess access to materials, it is vital to remember there is a world - countries, industries, and workers - behind each production. By advocating for better working conditions worldwide, learning how products are made, and being mindful of how much we consume, globalization can benefit all people.
