Abstract The author if this paper will begin by providing a definition of globalization. Next, the author will identify and examine at least two of the traditional international trade theories that have been developed. Next the author will identify the major drivers of globalization and lastly, the author will explain four effects of globalization that impact the author’s community and organization. Globalization Questionnaire According to Hill (2009), globalization is the shift towards a more integrated and inter-dependent world economy.
Some of the traditional international trade theories that support the concept of globalization include: •Absolute Advantage Theory •Comparative Advantage Theory There are several other relevant theories however, for the purpose of this paper; the focus will be on the two previously mentioned theories. The Absolute Advantage Theory was authored by Adam Smith in 1776 and his position was that a country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it (Hill, 2009).
With that being established, he further theorizes that it is in the countries best interest to basically stick to what it does best and trade those products it has absolute advantage in producing for goods and/or services that it does it is not specialized in producing. In 1817 David Ricardo expanded on Smith’s trade theory by authoring the Comparative Advantage Theory. He agrees with Smith in the fact that countries should specialize in the products that it is most efficient at producing and then buy the products it is less efficient in producing (even if they buy products from other countries that it could produce better).
His theory basically states that at the end of the day both countries would have more and be able to consume more. Falling trade barriers and technological advancements are two of the main drivers of the globalization concept. For example, the GATT (General Agreement on Tariffs and Trade) and NAFTA (North American Free Trade Agreement) trade agreements are examples of trade agreements authored to encourage free trade between specific countries and the WTO (World Trade Organization) was established to monitor trade between countries.
In regards to technology changes examples include advancements with the launch of the internet, transportation advancements (Containerization), and telecommunications advancements (decrease in international long distance call rates). Four effects of globalization that impact my community and organization include: •Jobs •Wages •Environment •Working Conditions The trend that is being observed with regards to jobs and globalization is that higher-skilled jobs are now being outsourced to other countries. It was previously thought that higher-skilled jobs would never be outsourced but statistics show this assumption is no longer correct.
The text gave an example of MRI scans being sent to India to be read via the internet. The only alternatives for potential employees impacted by globalization are to either obtain jobs in other high-skilled areas or to accept lower wages. Finally, because not all countries have the same environmental and labor laws both areas have the potential of being exploited by firms that have established production facilities abroad. An increase in pollution and exploitation of child labor laws impacts us all. References Hill, C. W. L. (2009). International Business: Competing in the Global Marketplace (7th ed. ). New York: McGraw-Hill/Irwin.
