The Impact of Globalization on U.S Economy
Globalization can be defined as changes that lead to a freer movement of services, goods as well as production factors between nations. In the modern times, the impacts of globalization on the economy of the US are still disputed matters of the economy. In broader terms, economists see globalization as highly beneficial on the basis of the gains that are realized from the international free trade.
However, employees oppose it frequently because it transfers their responsibilities to foreign or distant locations. Additionally, employees want to keep their jobs. On the other hand, economists can show stakes by concluding that the basic forces of the economy are munificent. Journalists, legislators as well as other observers are at the middle. After viewing both side of the issue they usually do not have a conclusion (Crawford & Forgarty, n.d.).
The economy of America has been transformed by globalization. For instance, people and markets were initially difficult to access a century back. However, these can now buy products from America. They are also able to export their products. Cultural assortments have led to the creation of updated and exciting technology and products. Technology has transformed the world into a “global” village.
By taking a glance at everything in a house, typical Americans can be surprised at seeing where things in their homes were made from. They would realize that they have shoes from Vietnam, toys for children from China as well as food made in other places across the globe. U.S companies use foreign labor and materials in producing inexpensive goods. Additionally, the companies export these products abroad.
While touring different parts of the world, you will see Japanese with MTV, an Egyptian in jeans and a Chinese enjoying a coke. How companies in America do business has been changed by globalization. Companies have become cosmopolitan corporations. Firms like Coca-cola, Wal-Mart and McDonalds are globally known and they propel the economy of the U.S. Companies are able to expand their operations to new markets as well as to overcome trade barriers due to globalization (Smith, 2013).
Globalization acts as affirmative change’s catalyst. According to Rao (2013), globalization has affected the economy of the US in different ways as follows:
- Market efficiency: A market is efficient if it is what every economy wants to achieve. Equilibrium between the quantity that merchants are ready to sell and what consumers are ready to pay for symbolizes a competent market. If a business or company can enhance its production through activities like purchasing from the foreign suppliers or outsourcing, then it can afford to reduce its selling price and this will increase demand and affordability. Even if costs are not lowered by businesses, extra profits can be realized and surplus profit can be relocated to other things that include expanding investment, increasing wages and creating more expansion projects.
- Increased competition: As long as there are several producers who want to get a share in the economy, competition will be there and this is good for consumers because services and products’ quality improves. When businesses start venturing into different countries, they bring in new standards of an international marketplace. Consumers also get options from which they can choose what to consume. More competitors mean a battle over a share in the market. Therefore, every company must keep advancing its services or products to give consumers more value. This implies that products will improve and prices will go down and this is good for buyers.
- Stabilization of security: Several conflicts have been alleviated by globalization. These may have worsened financial strength in different countries that did not depend on one another. When a country mostly depends on the economy of another state, it is hard to imagine that either of such states would attack the other. Therefore, globalization has strategically helped in increasing global security.
- Wealth equality: Most US citizens have established their businesses and they are not able to keep their families comfortable due to globalization. Citizens of the US can now take things like shelter, abundant food and clean water for granted. This is because their living standard has now been improved and this is not the case in other countries.
Globalization has restricted the national governments’ self-rule of coming up with economic policy. This can help or harm the employees. Businesses compete to hold and to increase investment. This can dishearten societies or governments to import taxes on corporate entities. Tax and expenditure limitations can lead to a decrease in the social welfare expenditure. As a result, pressures of the international markets may compel governments to stop controlling the labor and product markets. For the economy of the US, globalization implies that Americans participate in the global markets’ operations. Additionally, although globalization leads to more cultures and products in new areas, it reduces distinctiveness among different people globally (Smith, 2013).
Crawford, B., & Fogarty, E. (2008). The Impact of Globalization on the United States. London: Praeger Publishers. Business Economics Vol. 3.
Smith, R. (2013). Globalization and the U.S. Economy. Retrieved 18 November, 2013, from http://suite101.com/a/globalization-and-the-us-economy-a104014
Rao, A. (2013). 4 positive impacts of globalization on world economy. Retrieved 18 November, 2013, from http://www.kstatecollegian.com/2013/05/07/4-positive-impacts-of-globalization-on-world-economy/
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