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Globalization: Who benefits from it?

by Jason Shi

Created on: November 15, 2008

Wearing a made-in-China T-shirt, he came out from his Toyota SUV and merged into the crowd that was gathered by an anti-globalization organization through its website. This is an ironic cartoon that I have seen before. Numerous arguments are raised against globalization nowadays. Some argue that free trade will eliminate jobs and cause loss in their domestic economy, and others argue that globalization causes degradations of environmental and labor standards. (Wikipedia.org, 2008) However, they mainly focus on the cost of globalization; they do not consider the benefits or possible alternatives for reducing the cost while still reaping the benefits. Globalization benefits us in at least two ways: it will create wealth and will eventually promote environmental and labor standards.

First of all, international trade will create more wealth and lead to benefits for all. According to Roger.L.Miller,(2005), an authoritative economist, economic theories of comparative advantage suggest that free trade leads to a more efficient allocation of resources, with all countries involved in the trade benefiting. Let us interpret this idea by using an individual example. I can type 1 page per hour and write 1 page per hour, while Tom can type 2 pages per hour and write 1 page per hour. Given 2 hours to do both works individually, the total output will be 3 pages typed and 2 pages written. What if I specialize in writing and Tom specializes in writing? The joint output will be 4 pages typed from Tom and 2 pages written from me. The extra 1 page is a result from specialization and free trade. Now we can just replace individuals with nations. World wealth will be greater when countries specialize in producing the goods in which they have a competitive advantage and then engage in foreign trade. On the other hand, while those critics argue that free trade eliminates the jobs in importing industries and causes loss in their economy, we also can see the jobs in exporting industries are increasing. In his speech about the effects of globalization, Tom G. Palmer, a senior fellow of Cato Institute, responded, "free trade does not affect the number of jobs, but it affects the kinds of jobs people have." In another word, it increases the jobs they have a competitive advantage and eliminates the jobs they are not efficient in. As a long run, free trade leads to a more efficient allocation of resources and creates more wealth worldwide than a closed economy.

Globalization is not only economically

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